Annual Financial Report
25/07/2024 07:00
MIGO Opportunities Trust plc
Annual Report
for the year ended 30 April 2024
MIGO Opportunities Trust plc (“MIGO” or the “Company”) today announces
Results for the year ended 30 April 2024
The financial information set out below does not constitute the Company’s
statutory accounts for the years ended 30 April 2024 or 2023 but is derived
from those accounts. Statutory accounts for 2023 have been delivered to the
Registrar of Companies, and those for 2024 will be delivered in due
course. The Auditor has reported on those accounts; their reports were (1)
unqualified; (2) did not include any reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying their report; and
(3) did not contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
2024 Realisation Opportunity
Together with the Annual Report for the year ended 30 April 2024, shareholders
should also note the document entitled "2024 Realisation Opportunity Document"
which is available on the Company’s website www.migoplc.co.uk together with
a Form of Election for shareholders who wish to realise some or all of their
shares.
More information on the 2024 Realisation Opportunity can be found in the
annual report, in particular the Chairman’s Statement, the Business Report,
the Directors’ Report and the Notice of AGM together with Explanatory Notes
thereto.
Financial Highlights
30 April 2024 30 April 2023 % movement
Net asset value (“NAV”) per share* 362.6p 328.6p 10.3%
Share price 346.0p 318.5p 8.6%
Share price discount* to NAV per share (4.6)% (3.1)%
Total net assets 81.7m 79.8m 2.4%
NAV volatility 6.1% 8.2%
Gearing* 6.1% –
Ongoing charges ratio* 1.5% 1.4%
* Alternative Performance Measure (“APM”), see Glossary.
For commentary in respect of the above figures and the Company’s performance
during the year please see the Chairman’s Statement, the Investment
Manager’s Report and the overview of the key performance indicators.
Total Return Performance to 30 April 2024
1 year 3 years 5 years 10 years Since Launch**
Net Asset Value* 11.3% 5.8% 32.8% 118.6% 257.1%
Share price* 9.6% 1.0% 26.4% 133.7% 259.1%
SONIA plus 2% 6.9% 14.2% 19.7% 35.5% 112.5%
* Alternative Performance Measure, see Glossary.
** 6 April 2004.
Source: Morningstar.
Chairman’s Statement
Introduction
I am pleased to present the Annual Report for MIGO Opportunities Trust plc
(“MIGO” or the “Company”) covering the year ended 30 April 2024 – a
year which includes the Company’s twentieth anniversary. MIGO’s purpose
remains the same as throughout that 20 year period – in the broadest terms,
to identify undervalued attractive themes in the investment trust sector
trading at a discount. We continue to believe that the return potential from
this approach is significant. Over the 20 years since its launch on 6 April
2004, MIGO’s net asset value per share has risen by 257.1% and the share
price by 259.1% (both total return figures). Comparative returns for SONIA
plus 2% and the Numis All Share index have been 112.5% and 291.8%
respectively. With the current difficulties in the investment trust market,
our Managers believe the return outlook is one of the best that they have seen
in the history of MIGO.
Throughout the past year, financial markets have been impacted, both up and
down, by ongoing efforts to curb inflation and speculation about the direction
of interest rates. However, aside from the macro-economic considerations, the
investment trust sector has taken a hammering from all sides, which has led to
an expansion in discounts to NAV to near all-time extremes. The issues facing
the sector have included over regulation, competition from passive investment
vehicles, disinvestment from the UK market and consolidation in the wealth
management sector. While it is worrying to consider the future of parts of the
sector, market conditions certainly favour our Investment Manager’s style of
searching for future themes at current discounts in the investment trust
universe. That is to some degree a silver lining to this particular cloud.
New Investment Manager, Registered Office, Depositary and Custodian
In addition to reaching MIGO’s twentieth anniversary, 2023 was significant
for the Company with our switch to a new AIFM and Investment Manager.
After a full manager review and rigorous selection process, the Board took the
unanimous decision to appoint Asset Value Investors Limited (“AVI”) as the
Company’s new AIFM and Investment Manager, as announced on 27 July 2023.
Then, on 16 October, the Board was able to announce that Nick Greenwood would
join AVI to co-manage MIGO along with Charlotte Cuthbertson, both of whom are
well known to our longer-term investors as the Company’s lead portfolio
managers for a number of years.
AVI’s appointment commenced from close of business on Friday 15 December,
concurrent with Premier Miton concluding its role as investment manager. Nick
Greenwood joined AVI the following business day, Monday 18 December. Also,
with effect from 18 December 2023, the registered office moved to the offices
of Frostrow Capital LLP, our Company Secretary, Marketing and Administration
Manager. The new address can be found at the end full annual report. The Board
would like to thank Premier Miton again for their hard work and support over
the years.
Working with AVI, an experienced manager of investment trusts and of funds
investing in the investment trust sector, is off to a good start and the Board
expects MIGO to benefit from AVI’s sector expertise and supportive analyst
resources as well as its distribution and marketing channels. Further
information on AVI can be found at: www.assetvalueinvestors.com.
Together with a new AIFM and Investment Manager, MIGO also has a new
Depositary and Custodian, JP Morgan Europe Limited and JP Morgan Chase Bank
respectively. We thank the Depositary and Custody teams at The Bank of New
York Mellon (International) Limited for their support over the years and for
their help in transitioning the Company’s business over to JP Morgan, which
has an excellent team and well established working relationships with AVI.
As already noted in the interim report, it has been encouraging to see
shareholders stand by MIGO during the uncertainty and upheaval over the past
year. Accordingly, supported in part by the Board’s proactive approach to
buybacks, our share price and discount have held at reasonably steady levels.
I thank everyone for their patience.
There will be no change to MIGO’s discount management policy or fee
structure.
Performance
During the year under review, your Company’s net asset value (“NAV”) per
share rose to 362.6p (2023: 328.6p), a total return of +11.3% (2023: -9.3%).
The Company’s share price ended the year at 346.0p (2023: 318.5p), giving a
total share price return of +9.6% (2023: -10.3%). The total return performance
chart gives a longer-term picture, showing the NAV return per share over 5
years as +32.8% and the share price return over the same period as +26.4%. At
the end of the year under review, the Company traded at a discount of 4.6% to
NAV per share (2023: 3.1%).
We believe the strategy of the Company is best measured against a “cash
plus” benchmark, and accordingly the Company does not have a formal equity
benchmark against which the Board reviews long-term performance and our
Investment Manager does not invest by reference to an index. Over the year,
the Company’s formal cash benchmark, SONIA plus 2%, rose by 6.9% (2023:
+4.6%) and over five years by 19.7%.
A comprehensive appraisal of the performance of, and developments within, your
portfolio during the year under review and since 30 April 2024 is provided in
the Investment Manager’s Report. During the year, the principal drivers of
positive performance were holdings in Georgia Capital, India Capital Growth,
uranium trusts and Biotech Growth. The main detractors were property trusts
and Aquila European Renewables.
Dividend
The results attributable to shareholders for the year ended 30 April 2024 are
shown in the Financial Statements. In the year, the Company made a revenue
account profit and, as a result, under investment trust rules regarding
distributable income, a final dividend must be paid to comply with those
rules.
Subject to shareholders’ approval at the forthcoming Annual General Meeting
(“AGM”), a final dividend of 0.6p per share will be paid on 4 October 2024
to shareholders on the register as of 6 September 2024. The associated
ex-dividend date will be 5 September 2024.
This is only the third dividend to be paid in the history of the Company, but
MIGO’s principal objective remains to provide shareholder returns through
capital growth in its investments and outperforming SONIA plus 2% over the
longer term. Therefore, the Board is maintaining its current policy to pay
only those dividends necessary to maintain UK investment trust status and
shareholders should not, therefore, expect the dividend to necessarily
continue at current levels nor make up a significant proportion of the total
return generated by your Company. Subject to the investment trust rules, any
dividends and distributions will continue to be at the discretion of the
Board.
Board Changes
As previously reported, the appointment of AVI as our new AIFM and Investment
Manager meant that Katya Thomson could no longer be considered independent
under the AIC’s Code of Corporate Governance, as she also sits on the board
of another AVI investment trust. She therefore took the decision to step down
from her role as non-executive director and Chairman of the Audit Committee
once a replacement could be found.
With the help of an independent consultancy, the Board undertook a search for
a new independent, non-executive Director with the necessary qualifications to
take over from Katya as Chairman of the Audit Committee. As announced on 12
December 2023, the Board was delighted to appoint Caroline Gulliver as our new
Chairman of the Audit Committee with effect from the close of business on 29
December 2023. Katya stepped down from her role on the same day. Caroline’s
short biography can be found in the Directors’ Report, and she will stand
for election by shareholders at the forthcoming AGM.
There is one more farewell, as Hugh van Cutsem retired from the Board of MIGO
on 10 July 2024. This was announced on 14 March and followed 14 years of
service to MIGO, during which he proved to be a great advocate of the Company
and added his considerable experience and sage advice to the Board’s
decision making.
The Board warmly welcomes Caroline, who has already had great input in the
drafting of this annual report. At the same time, we will miss Katya’s and
Hugh’s insights and wish them well for the future.
In line with best Corporate Governance practice, an annual review of the
effectiveness of the whole Board and its Committees was again performed, also
taking into account the performance of our new Director. The Board is
satisfied that each Director is fully engaged with the Company’s business
and that all Directors are working together as an effective team. In
accordance with our policy of all Directors standing for re-election annually,
you will find the appropriate resolutions in the Notice of the AGM.
2024 Realisation Opportunity
The Articles of Association (the “Articles”) give shareholders the right
to elect to realise all or part of their holdings of Ordinary shares at three
yearly intervals. As the last realisation opportunity occurred in 2021, the
next realisation opportunity is due this year (the “2024 Realisation
Opportunity”). This year, to reduce the costs for the Company and to make
the process more streamlined, no circular will be mailed to shareholders.
Instead, those shareholders who would like to realise some or all of their
holdings are invited to download the necessary documents from MIGO’s
website. To facilitate the 2024 Realisation Opportunity, two special
resolutions will be put to shareholders at the forthcoming AGM (the
“Realisation Opportunity Resolutions”). For details of the Realisation
Opportunity Resolutions, please refer to the Explanatory Notes of this Annual
Report. Shareholders should also refer to the “2024 Realisation
Opportunity” document which is available on the Company’s website:
www.migoplc.co.uk (the “2024 Realisation Opportunity Document”).
Share Issues and Share Buybacks
At the year-end, the Company’s shares traded at a discount of 4.6% to net
asset value per share, having traded at a discount of 3.1% at the 2023
year-end. In comparison, the unweighted average discount across the whole
investment companies universe* has expanded from 11.03% to 19.98% over the
same period.
During the year ended 30 April 2024, no new shares were issued. A total of
1,760,000 shares was repurchased in order to restrict any undue widening in
the Company’s share price discount to NAV per share. While the Company does
not target any particular share price or discount level for buybacks, the
buybacks conducted during the year were at discounts ranging from 2.0% to
5.7%. As at the date of this report, the discount stands at 1.1% and 75,000
further shares have been repurchased since the year-end. The Board is
unanimous in its support of the buyback policy to keep any discount volatility
to a minimum and is firmly of the view that buying in at a double discount
(MIGO shares’ discount to NAV and the unweighted average discount to NAV of
the underlying holdings, 30.7% as at 22 July 2024, being the latest practical
date prior to the publication of this report) is accretive to shareholders.
* The full investment companies universe as defined by Numis Securities
Research including both equities and alternative asset investment companies.
Sector Cost and Regulation Issues
I already commented in the interim report about the ongoing charges figure
(“OCF”) which is the charge paid over a year quoted on the ‘Key Investor
Information’ (“KID”) document and which the Board, alongside many
investment trust specialists, considered misleading. Whether actual and
underlying costs are presented in one single figure or in a layered approach,
many platforms and readers will add them up, and in an industry where low fee
levels are sometimes misunderstood as the simplest way to evaluate value, this
can become a problem.
Having lobbied the Association of Investment Companies and HM Treasury to
intervene to confirm that costs associated with listed investment companies
should be excluded from the ‘single figure’ OCF across all retail product
and service categories, the Board of MIGO now awaits further developments and
amended legislation in due course. The AIC has made a submission to the FCA,
recommending the exclusion of investment companies from the current regime as
the easiest solution to prevent cost disclosures undermining demand for
investment companies. Sadly, the recent general election in the UK may stand
in the way of an early resolution of this issue.
Annual General Meeting
The AGM of the Company this year will be held on Wednesday, 18 September 2024
at 12 noon at 25 Southampton Buildings, London WC2A 1AL. The notice convening
the AGM can be found at the back of this document, together with an
explanation of all resolutions. The Directors look forward to meeting
shareholders.
Outlook
With a new AIFM and Investment Manager having been appointed, MIGO and its
shareholders have a lot to look forward to.
Our investment universe currently offers some incredibly appealing
opportunities given the material widening of discounts unrelated to
fundamental prospects in many cases. In addition, a peak in interest rates may
force a more positive reassessment of sectors trading at significant discounts
but which had previously traded at premiums.
The Company is in a good position and your Board remains optimistic and thanks
shareholders for their continued support throughout the last 12 months and
going forward.
Richard Davidson
Chairman
24 July 2024
About Asset Value Investors
The Company has appointed Asset Value Investors Limited (“AVI”) as its
Alternative Investment Fund Manager.
AVI was established in 1985 to take over the management of one of the oldest
listed investment companies in London. AVI has a long history of running
investment trusts and investing in them.
AVI’s strategy is to seek out-of-favour companies whose assets are
misunderstood by the market or under-researched and which trade significantly
below the estimated value of the underlying assets. This specialist
research-driven approach is still a unique combination nearly 40 years later.
Visit the website at: www.assetvalueinvestors.com
Q&A with our Portfolio Managers
It has been 20 years since Nick Greenwood launched MIGO Opportunities Trust
plc (“MIGO”). Much can happen over two decades but the constant has been
the search for the best opportunities in the investment trust sector. The
biggest change this year will have been the move to Asset Value Investors. As
MIGO celebrates its 20th anniversary, we chat to Fund Managers, Nick and
Charlotte, about the journey the Company has been on in those two decades,
challenges faced and how things have changed.
Q What an exciting milestone to be celebrating. Take me back to the
beginning of the MIGO story – where did it all begin?
A Two decades ago, the fund management world was a very different
place. Straying too far from a benchmark was deemed a serious career risk, and
tracking error was a metric closely monitored. This created a dysfunctional
environment detached from the real world. In the early noughties if you had
asked a range of UK fund managers which FTSE stock they liked the least, the
majority would correctly respond with Vodafone which had recently bought
Mannesmann in a blockbuster deal. They would reflect their bearishness by
taking an underweight position perhaps 10% in comparison to Vodafone’s 14%
in the index, meaning that it remained a significant investment. Just imagine
thanking a client for being entrusted with their life savings and then telling
them that the first thing you had was to put a tenth of that sum into the
shares that you think are going to fall the furthest. It was clear that common
sense needed to be introduced into portfolio management, buying only
investments that would make actual money. MIGO was our response and explains
our use of a cash benchmark.
Q 20 years is a long time – what are some of the biggest challenges
that MIGO has had to face in that time?
A Given that MIGO was launched post the splits crisis, the greatest
challenges are those that the trust world is facing today. Firstly, the rapid
consolidation of the wealth management industry into a handful of
extraordinarily large companies. The assets under management are such that it
makes it very difficult for them to use investment trusts at all as they just
can’t buy enough shares to move the needle. Greater damage is being caused
by flawed regulation concerning cost disclosures. Whilst this problem will
eventually be resolved it is impossible to quantify how much damage will be
inflicted in the meantime. The positive side is that these challenges have
meant discounts are at their widest since the Great Financial Crisis in 2008.
A fantastic opportunity to build a portfolio of trusts trading far below their
intrinsic value. Either we will see buying returning to trusts or if the stock
market cannot value an asset properly then eventually the real world will buy
the underlying portfolio eliminating the discount and providing a profitable
exit for shareholders. MIGO is well positioned to benefit from this
phenomenon.
Q What do you think potential investors are attracted to about MIGO?
A MIGO’s flexible approach which allows it to go anywhere, meaning
that it is lowly correlated with mainstream indices and can exploit an
inefficient market. We can invest in any geography or asset class as long as
it is held in a closed-end structure. Many of our Investors understand the
market opportunity but rather than pick individual trusts effectively
sub-contract selection by owning shares in MIGO.
Q Which sectors do you find particularly interesting now and why?
A Interesting sectors include; UK Microcaps, biotech and more recently
growth private equity. Microcaps suffer from the same problem as investment
trusts in that they are too small for many institutions to own and will be
acquired by the real world at a premium. Biotech has been treated harshly as
it has been lumped in with other pre profitable sectors. Big pharmaceutical
companies will need to replace products which are reaching patent expiry. This
will be achieved through acquiring biotech companies at a time when the FDA is
approving a record number of new drugs. Growth private equity is a classic
arbitrage between perception and reality. A trust like Seraphim Space seems an
exotic asset class at first glance but in practice the industry is maturing.
Communications systems have long employed satellite, furthermore the industry
is heavily exposed to defence where budgets are only going one way.
Q You have employed gearing this year, why is that?
A Discounts have become extremely wide as the result of the challenges
discussed earlier; corporate activity will increase making it a profitable
time to own trusts. We would expect that our gearing could become higher going
forward within the limits of our investment policy and our loan facility.
Q Have there been any synergies with the move to Asset Value Investors?
A Asset Value Investors has a long history of owning and running
investment trusts which makes it a perfect home for MIGO. Although we have
very few common holdings with AVI Global, we have a similar patient, value
approach and have been able to discuss ideas and themes with the wider team.
Q Looking to the future, where do you think MIGO might be in another 20
years?
A This may be more relevant to Charlotte than Nick. We think the important
point is that the investment trust movement has constantly evolved as the
environment has changed. We expect this to continue into the future and MIGO
will evolve with it. Although the sector has had a particularly tough period
we are optimistic for the future.
Our Top 10 Holdings
Focus on small and mid-cap opportunities
The top ten equity investments make up 40.6% of the portfolio*, with operating
businesses spread across a range of sectors.
* For definitions, see Glossary.
% of MIGO portfolio
Top 10 40.6%
Other holdings 59.4%
100.0%
1. VINACAPITAL VIETNAM OPPORTUNITIES
6.1% of portfolio (2023: 6.6%)
17.7% discount
Vietnam specialist which invests in growth equity in privately negotiated
opportunities across listed, private equity and state owned enterprise assets.
These stand to benefit from the increasing trade friction between the US and
China. The trust takes a long-term active approach. The team take significant
minority stakes in leading private companies in Vietnam. Vietnam Opportunities
is a FTSE 250 constituent.
2. GEORGIA CAPITAL PLC
6.0% of portfolio (2023: 5.1%)
50.6% discount
Georgia Capital focusses on the fast-growing Georgian economy. The country
lies at the crossroads of Western Asia and Eastern Europe. It has become a
conduit between the region and Western Europe and as such has attracted
significant investment. The trust focuses on capital-light, larger scale
investment opportunities such as insurance, pharmacies and education.
3. BAKER STEEL RESOURCES TRUST
4.2% of portfolio (2023: 4.8%)
34.7% discount
Baker Steel Resources focusses on unlisted mining companies. It is a developer
of mines and creates value from acquiring promising deposits and uses its
intellectual capital to gain the required planning permissions. Once fully
permitted the trust then typically sells to a multinational which will build
the mine and take the project into production.
4. OAKLEY CAPITAL INVESTMENTS
4.2% of portfolio (2023: 5.0%)
32.5% discount
Oakley Capital Investments is a London listed closed-ended fund which invests
in the private funds run by Oakley Capital, a UK-based private equity firm.
The trust owns a portfolio of fast growing businesses in the consumer,
education, services, and technology sectors. Its process focuses on less
intermediated markets and complex deals which avoids the auction process,
sourced by a network of entrepreneurs who believe in the Oakley philosophy. We
believe that OCI’s significant discount will narrow from continued NAV
outperformance arising from realised exits, and the continued earnings growth
of its portfolio.
5. JPMORGAN INDIAN INV TRUST
3.7% of portfolio (2023: 2.0%)
18.2% discount
This trust takes a more mainstream approach to investing in India compared to
higher profile peers such as Ashoka and India Capital Growth. Like Vietnam,
India stands to benefit from increasing trade friction between the US and
China. JPMorgan India operates performance windows which require the trust to
redeem 25% of the shares around par in the event of underperformance.
6. AQUILA EUROPEAN RENEWABLES
3.7% of portfolio (2023: 3.2%)
25.4% discount
Managed from Hamburg, Aquila European operates solar parks in Iberia as well
as wind farms in Scandinavia and Greece. A rise in interest rates has
eliminated demand for many of the recently launched alternative closed ended
investment funds. This has led to them falling to wide discounts. This creates
an arbitrage opportunity where the vehicle is unloved but the assets they own
are in plenty of demand.
7. TUFTON OCEANIC ASSETS LTD
3.6% of portfolio (2023: nil)
25.1% discount
The Company is a Guernsey domiciled investment company listed on the
Specialist Funds Segment of the London Stock Exchange which invests in a
diversified portfolio of second hand commercial sea-going vessels delivering
strong cash flow and capital gains to investors. ESG requirements dictate that
commercial shipping should move at ever slower speeds. This effectively
reduces supply and underpins pricing at a time when new capacity is not
available as shipyards order books are already full.
8. GEIGER COUNTER LTD
3.4% of portfolio (2023: 3.7%)
23.1% discount
Owns a portfolio of uranium miners. Sentiment towards nuclear power has been
terrible. it was perceived to be a dying industry. Recently it has become
clear that reaching carbon neutral targets is unachievable unless nuclear is
part of the mix. The resurgence of nuclear energy requires a lot of uranium.
Very little new supply is coming on stream, as until recently prices have been
too low to justify the investment. Whilst uranium is not a rare mineral, lead
times to build mines are around a decade. Therefore, it is likely to be in
short supply for some years.
9. REAL ESTATE INVESTORS PLC
2.9% of portfolio (2023: 3.0%)
38.1% discount
A publicly quoted property investment company with a portfolio of commercial
and residential properties, diversified by property type and occupier with a
geographical focus on Birmingham and the Midlands. Over the years, management
have added value through their deep local knowledge and hands on style. The
fund is steadily winding down its affairs but still trades at a wide discount.
10. PHOENIX SPREE DEUTSCHLAND LT
2.8% of portfolio (2023: 3.4%)
59.5% discount
Owns a portfolio of residential apartments in Berlin where the supply of homes
is dwarfed by the number of potential tenants seeking to rent them. The
company invests in predominantly altbau multiapartment rental properties with
exposure to commercial real estate as well.
Investment Manager's Report
Contributors & Detractors
During the most challenging times, the best opportunities arise. The
investment trust sector has faced a perfect storm which has led to some
extreme discounts developing. These headwinds are turning into tailwinds which
will create a powerful combination of rising net asset values and narrowing
discounts.
Performance
Our results this year excitingly mark the 20th anniversary of MIGO
Opportunities Trust. The Company started life in 2004 as the iimia Investment
Trust and it has been interesting to look back at our first annual report to
see how much has changed and how much hasn’t. The phrases “the investment
trust industry is entering a period of substantial change” and “increased
corporate activity due to the arrival of a new breed of arbitrageurs” could
be equally descriptive of today’s environment. Today, MIGO Opportunities is
four times the size it was in those days but the mandate to find the best
opportunities in the investment trust sector without adherence to an equity
related benchmark remains. As we will discuss later, the investment trust
sector faces a myriad of challenges, but we are confident that closed-ended
funds will remain an integral part of the UK stock market and provide
mispricing opportunities for MIGO to exploit in the future.
One of the biggest recent changes for the Company has been our move to Asset
Value Investors which was completed in December. We are delighted to be
working with our new colleagues and at a company that has a long history of
investing and running closed-ended funds. Our patient, value approach aligns
well with their investment style, and we are benefiting from a collaborative
and collegiate environment.
The second half of 2023 was one of the toughest environments for investment
trusts that we have ever experienced. Rising interest rates trying to contain
high inflation undermined many alternative asset trusts which had been
launched to offer high yields to income starved investors. With interest rates
at a 20 year high, it is now possible to get a decent return on cash and
gilts. This has decimated demand for this type of product. The oversupply
explains the discounts as investment trust shares prices are decided by the
balance of supply and demand.
Ongoing charges disclosure has been a huge headwind for the investment trust
sector which is becoming increasingly cost-obsessed. Under the current
legislation investment trusts are required to disclose costs far and above
those of open-ended funds. These costs are misleading, and the industry has
been actively lobbying both the government and regulators to get this issue
resolved. In the meantime, it has resulted in many investors who would
normally be investment trust fans sitting on the sidelines as trust OCFs as
currently reported distort the cost numbers private wealth managers disclose
in their own products.
Consolidation in the wealth management industry continued with the merger of
Rathbones and Investec creating a behemoth. Whilst this trend remains
unrelenting some investment led teams are splintering away to boutiques where
size is not an impediment to buying trusts.
Contributor
Georgia Capital
6.0% of portfolio
50.6% discount
Georgia Capital was our standout performer over the year. Georgia lies at the
crossroads of Western Asia and Eastern Europe. It has become a conduit between
the region and Western Europe and as such has attracted significant
investment. Increasing wealth means that the population can now, for the first
time, afford to engage in activities such as educating their children
privately, using private healthcare and insure their property; all industries
which figure prominently within Georgia Capital’s portfolio. Despite the
local economy being at a classic sweet spot, the shares had fallen to a 60%
discount reflecting investors fears since the Russian invasion of Ukraine.
Post period year end we have seen some tumultuous share price movements after
a controversial “foreign agents” law was passed by the government sparking
widespread protests. This has caused some significant weakness in the share
price, but we are hopeful that the elections later in the year should provide
some stability.
Contributor
India Capital Growth Fund
1.3% of portfolio
5.6% discount
India Capital Growth benefited from a strong Indian stock market and a
narrowing discount, returning 40%. A classic example of a MIGO holding. With
valuations of mid and small Indian companies looking very full and the
discount evaporating we have now exited the position post year end.
Contributors
Yellow Cake
1.7% of portfolio
8.9% discount
Geiger Counter
3.4% of portfolio
23.1% discount
Our holdings in uranium, Yellowcake and Geiger Counter, returned 71% and 46%
respectively. The uranium price had languished at around $30 for a number of
years post the nuclear accident in Fukushima. This means that very few mines
have been developed as the price has been too low to make them economical. In
the past few years, however, nuclear power has become more central to many
countries’ energy plans pushing up consumption of the metal. Limited supply
and increasing demand squeezed the price higher which hit $106 in January. At
that point our exposure had become 10% so we sold half of it into this
strength.
Contributor
Biotech Growth Trust
2.0% of portfolio
7.4% discount
Biotech Growth was a useful contributor having entered the period under review
friendless. The sector was harshly treated as a long duration asset and the
trust’s heavy exposure to smaller companies also hurt. In practice, the
industry is well positioned as major pharmaceutical groups face significant
patent expiries within their product ranges. These will have to be replaced by
buying biotech companies at a time when the FDA has been approving a record
number of new drugs. Therefore, it was unsurprising to see Biotech Growth
rallying hard.
Detractors
Property trusts were the main detractors over the period. Namely Phoenix Spree
Deutschland and Macau Property Opportunities (MPO).
Phoenix Spree Deutschland
2.8% of portfolio
59.5% discount
Phoenix Spree has been hit by several disappointments over the past few years.
Despite strong demand for rental accommodation in the German capital, the
shares continued to drift. There is little demand for this asset class amongst
UK investors and it is likely that the trust will lose next year’s
continuation vote. The shares ended the period at 146.5p compared to latest
net asset value of 343p.
Macau Property Opportunities
1.3% of portfolio
59.6% discount
The property market in Macau has been moribund since Covid when stringent
restrictions around travel were introduced. This meant considerably fewer
visitors to the casinos delaying the island’s economic recovery. Macau
Property Opportunities has a portfolio of upmarket apartments and the lack of
high rollers from the mainland has curtailed potential buyers. The trust is in
wind-up but uncertainty due to a lack of transactions has undermined the share
price. China has recently repealed its anti-speculation laws which should
boost the Macanese market.
Detractor
Aquila European Renewables
3.7% of portfolio
25.4% discount
Aquila European Renewables was another disappointing performer. Aquila owns
wind farms in Scandinavia and Greece as well as solar plants in Iberia. It
also owns a hydroelectric operation in Portugal. Lack of demand for the
structure drives the discount whereas the second hand market for wind and
solar plants is quite buoyant. This means that a corporate raider could make a
useful turn by forcing the trust to close and return cash to shareholders.
Changes
There have been quite a few new entrants into the portfolio. These
acquisitions have led to our utilising gearing for the first time since 2020.
They are mainly in sectors that were hurt by rising interest rates. Trusts
that the market perceived to have early stage, unprofitable companies were one
such area. We rebuilt our position in Chrysalis and bought positions in
Schiehallion, Augmentum Fintech and Seraphim Space. These steep discounts
reflected investors’ fear that these young, capital-hungry companies would
not raise the cash needed to remain afloat in such a hostile environment. The
reality is that many of these trusts’ investee companies had pivoted their
business models towards profitability and the majority had a cash runway to
achieve these aims.
Similarly, we have significantly increased our exposure to alternative income
producing assets. These include VH Global Sustainable Energy Opportunities,
Atrato Onsite Energy and Cordiant Digital.
Our largest new holding is Tufton Oceanic which owns a fleet of ships mainly
bulkers and tankers which it leases to the major shipping lines. Restrictions
on carbon emissions are progressively restricting the speed that vessels can
travel at. This effectively reduces supply at a time when shipyards have no
capacity to build bulkers and tankers as demand for tankers has already filled
their order books. Second hand values should remain firm. The trust recently
announced that it would hand back to shareholders much of the proceeds of the
disposal of its last container ships and wind down the trust commencing in
2028. Given the shares trade at a 26% discount that represents a useful pull
to redemption. It is encouraging to see the managers buying a significant
number of shares.
Atlantis Japan (AJG) was acquired by Nippon Active Value. We were pleased with
this result as AJG had been a disappointing investment. The trust had
struggled to perform and had languished on a wide discount. Unfortunately, we
were also required to sell out of Nippon Active Value. Its move to premium
listing meant that NAVF came under scope of a post splits crisis listing rule.
Given its ambitions in the trust world which has seen it acquire AJG and
Aberdeen Japan they declined to provide an undertaking not to invest more than
15% in other trusts. This made it difficult to retain this position.
Outlook
The Investment Trust sector has been facing an array of headwinds which has
led to extreme discounts especially amongst funds focussed on alternative
asset classes. Looking forward, these headwinds have the potential to turn
into tailwinds. Although inflation has remained stickier than investors
expected the pathway for interest rates remains downwards. Similarly, we are
disappointed with the delays in reforming the cost disclosure regime caused by
the snap election and the FCA’s requirement for a lengthy consultation
period. At some point, there should be a sensible reform and this could cause
trust share prices to rally sharply as investors who have been forced onto the
sidelines are able to return to the market.
In the medium term such wide discounts are unsustainable as, if the market
fails to properly value closed ended funds for internal reasons, then the real
world will claim the underlying assets on the cheap albeit at higher levels
than today’s share prices. These transactions will reduce the oversupply of
unwanted shares hanging over the market bringing supply and demand back into
equilibrium.
Whilst the current environment is as hostile as any our trust has endured
during its existence, we can look forward to the sector emerging from this
phase. This will be a highly profitable period as investors enjoy the powerful
combination of rising net asset values and narrowing discounts.
Nick Greenwood and Charlotte Cuthbertson
Asset Value Investors Limited
24 July 2024
10 Year Record
As at 30 April 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
NAV per share 362.6p 328.6p 362.6p 345.9p 223.1p 275.6p 276.4p 248.7p 182.4p 181.6p
Share price 346.0p 318.5p 355.5p 346.0p 214.0p 276.5p 273.0p 242.3p 164.3p 162.8p
Share price (discount)/premium
to NAV per share (4.6)% (3.1)% (2.0)% 0.0% (4.1)% 0.3% (1.2)% (2.6)% (9.9)% (10.4)%
Total net assets (£m) 81.7 79.8 94.7 93.1 62.6 77.2 75.2 62.9 46.1 45.9
Gearing 6.1% – – 2.1% – – 6.7% 8.0% 10.8% 6.5%
Portfolio Valuation
As at 30 April 2024
Valuation
Investment 2024 % of
Company Sector Region £’000 portfolio
VinaCapital Vietnam Opportunity Fund Private Equity Asia Pacific 5,112 6.1
Georgia Capital Equity Europe 5,047 6.0
Baker Steel Resources Trust Mining Global 3,525 4.2
Oakley Capital Investments Private Equity Europe 3,495 4.2
JPMorgan India Investment Trust Equity India 3,128 3.7
Aquila European Renewables Alternatives Europe 3,123 3.7
Tufton Oceanic Assets Equity Global 2,992 3.6
Geiger Counter# Mining Global 2,850 3.4
Real Estate Investors* Property UK 2,392 2.9
Phoenix Spree Deutschland Property Europe 2,366 2.8
Top ten investments 34,030 40.6
NB Private Equity Partners Private Equity North America 2,144 2.6
Duke Royalty* Alternatives UK 2,099 2.5
New Star Investment Trust Equity Global 1,963 2.4
International Biotechnology Trust Equity North America 1,942 2.3
River and Mercantile UK Micro Cap Investment Co Equity UK 1,907 2.3
The Schiehallion Fund Equity Global 1,903 2.3
EPE Special Opportunities* Private Equity UK 1,862 2.2
AVI Japan Opportunity Trust Equity Japan 1,725 2.1
Riverstone Energy Equity North America 1,717 2.1
CQS Natural Resources Growth and Income Mining Global 1,665 2.0
Top twenty investments 52,957 63.4
Biotech Growth Trust Equity North America 1,650 2.0
Dunedin Enterprises Investment Trust† Private Equity Global 1,597 1.9
Chrysalis Investments Alternatives Global 1,547 1.9
RTW Biotech Opportunities Equity North America 1,520 1.8
Ecofin US Renewables Infrastructure Trust Alternatives North America 1,460 1.7
Yellow Cake* Mining Global 1,434 1.7
Hansa Investment Co Equity Global 1,421 1.7
Ecofin Global Utilities and Infrastructure Equity Europe 1,388 1.7
Life Settlement Assets Alternatives North America 1,310 1.6
Augmentum Fintech Private Equity Europe 1,224 1.5
Top thirty investments 67,508 80.9
Rockwood Strategic* Equity UK 1,207 1.4
Cordiant Digital Infrastructure Property Europe 1,131 1.4
Atrato Onsite Energy Property UK 1,117 1.3
Ground Rents Income Fund Property UK 1,101 1.3
India Capital Growth Fund* Equity India 1,059 1.3
Macau Property Opportunities Fund† Property Asia Pacific 1,050 1.3
Amedeo Air Four Plus Alternatives Global 1,045 1.2
Seraphim Space Investment Equity Global 945 1.1
VH Global Sustainable Energy Opportunities Equity Global 906 1.1
Henderson Opportunities Trust Equity UK 903 1.1
Top forty investments 77,972 93.4
VPC Speciality Lending Investments Alternatives North America 891 1.1
Marwyn Value Investors Private Equity UK 878 1.0
Schroder Capital Global Innovation Trust Private Equity UK 816 1.0
Schroder British Opportunities Trust Equity UK 788 0.9
Downing Strategic Mico-Cap Investment Trust Equity UK 780 0.9
Rights & Issues Investment Trust Equity UK 428 0.5
EJF Investments Alternatives North America 368 0.4
Grit Real Estate Income Property Africa 334 0.4
Aseana Properties† Property Asia Pacific 167 0.1
CEPS Equity UK 90 0.1
Better Capital Pcc†^ Private Equity UK 84 0.1
Renn Universal†^ Equity North America 49 0.1
Cambium Global Timberland†^ Equity Global 33 0.0
Reconstruction Capital II†^ Equity Europe 30 0.0
Total investments in the portfolio 83,708 100.0
Other current liabilities (including net debt) (1,994)
Net asset value 81,714
* AIM/NEX Listed
† In liquidation, in a process of realisation or has a fixed life.
# Includes both Ordinary and Convertible Preference share holdings.
^ Unlisted or trading of shares currently suspended.
Investments in companies that have previously been written down to nil net
book value, but where ownership in the company is retained, are not disclosed
in this table.
Portfolio Analysis
As at 30 April 2024
Portfolio by geographical exposure
2024 2023
Global 29.2% 20.9%
UK 20.1% 19.8%
Europe 21.8% 14.3%
North America 16.0% 11.1%
Asia Pacific (ex-Japan) 7.7% 8.2%
India 5.1% 4.6%
Japan 2.1% 5.4%
Cash -2.4% 15.0%
Africa 0.4% 0.7%
Portfolio asset allocation
2024 2023
Equity 43.5% 37.6%
Private Equity 21.1% 13.8%
Alternatives 14.5% 9.6%
Property 11.7% 11.0%
Mining 11.6% 13.0%
Cash -2.4% 15.0%
Business Review
The Strategic Report contains a review of the Company’s business model and
strategy, an analysis of its performance during the year ended 30 April 2024
and its future developments, and details of the principal risks and challenges
it faces. Its purpose is to inform the shareholders of the Company and help
them to assess how the Directors have performed their duty to promote the
success of the Company. In particular, the Chairman’s Statement and the
Investment Manager’s Report concentrate on the outlook for the current year
and the factors likely to affect the position of the business.
The Strategic Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
Further information on how the Directors have discharged their duty under
section 172 of the Companies Act 2006 can be found below.
Business Model
The Company is an externally managed investment trust and its shares are
premium listed on the Official List of the FCA and traded on the main market
of the London Stock Exchange.
The Company has been approved by HM Revenue & Customs as an authorised
investment trust under sections 1158 and 1159 of the Corporation Taxes Act
2010, subject to there being no subsequent serious breaches of regulations. In
the opinion of the Directors, the Company is directing its affairs so as to
enable it to continue to qualify for such approval.
The purpose of the Company is to provide a vehicle for investors to gain
exposure to a portfolio of companies which have been undervalued by the
markets in which they are traded, through a single investment.
The Company’s strategy is to create value for shareholders by addressing its
investment objective, which is set out below.
As an externally managed investment trust, all of the Company’s day-to-day
management and administrative functions are outsourced to service providers.
As a result, the Company has no executive directors, employees or internal
operations.
The Company is an Alternative Investment Fund (“AIF”) under the UK
Alternative Investment Fund Managers Directive (“UK AIFMD”) and has
appointed Asset Value Investors Limited (“AVI”) as its new Alternative
Investment Fund Manager (“AIFM”) and Investment Manager with effect from
the close of business on 15 December 2023. Previously, Premier Portfolio
Managers Limited and Premier Fund Managers Limited (collectively “Premier
Miton”) acted as MIGO’s AIFM and Investment Manager respectively.
The Board has retained overall responsibility for risk management and has
appointed AVI to manage its investment portfolio. Company management, company
secretarial and administrative services are outsourced to Frostrow Capital
LLP.
The Board remains responsible for all aspects of the Company’s affairs,
including setting the parameters for monitoring the investment strategy and
the review of investment performance and policy. It also has responsibility
for all strategic policy issues, including share issuance and buybacks, share
price and discount/premium monitoring, corporate governance matters, dividends
and gearing.
Further information on the Board’s role and the topics it discusses with the
Investment Managers is provided in the Corporate Governance Report.
Investment Objective
The objective of the Company is to outperform SONIA plus 2% (the
“Benchmark”) over the longer term, principally through exploiting
inefficiencies in the pricing of closed-end funds (SONIA being the Sterling
Overnight Index Average, the Sterling Risk-Free Reference Rate preferred by
the Bank of England for use in Sterling derivatives and relevant financial
contracts). This is intended to reflect the aim of providing a better return
to shareholders over the longer term than they would get by placing money on
deposit.
The Benchmark is a target only and should not be treated as a guarantee of the
performance of the Company or its portfolio.
Investment Policy
The Company invests in closed-end investment funds traded on the London Stock
Exchange’s main market, but has the flexibility to invest in investment
funds listed or dealt on other recognised stock exchanges, in unlisted
closed-end funds (including, but not limited to, funds traded on AIM) and in
open-ended investment funds. The funds in which the Company invests may
include all types of investment trusts, companies and funds established
onshore or offshore. The Company has the flexibility to invest in any class of
security issued by investment funds including, without limitation, equity,
debt, warrants or other convertible securities. In addition, the Company may
invest in other securities, such as non-investment fund debt, if deemed to be
appropriate to produce the desired returns to shareholders.
The Company is unrestricted in the number of funds it holds.
The Company invests in listed closed-end investment funds that themselves have
stated investment policies to invest no more than 15% of their gross assets in
other listed closed-end investment funds. However, the Company may invest up
to 10%, in aggregate, of the value of its gross assets at the time of
acquisition in closed-end investment funds that do not have such a stated
investment policy.
In addition, the Company will not invest more than 25%, in aggregate, of the
value of its gross assets at the time of acquisition in open-ended funds.
There are no prescriptive limits on allocation of assets in terms of asset
class or geography.
There are no limits imposed on the size of hedging contracts, save that their
aggregated value will not exceed 20% of the portfolio’s gross assets at the
time they are entered into.
The Board permits borrowings of up to 20% of the Company’s net asset value
(measured at the time new borrowings are incurred).
The Company’s investment objective may lead, on occasions, to a significant
amount of cash or near cash being held.
Dividend Policy
It is the Company’s policy to pursue capital growth for shareholders with
income being a secondary consideration. This means that the Company’s
Investment Manager is frequently drawn to companies whose future growth
profile is more important than the generation of dividend income for
shareholders.
The Company complies with the United Kingdom’s investment trust rules
regarding distributable income which require investment trusts to retain no
more than 15% of their income from shares and securities each year. The
Company’s dividend policy is that the Company will pay the minimum dividend
required to maintain investment trust status.
Results and Dividend
The results attributable to shareholders for the year ended 30 April 2024 are
shown in the Statement of Financial Position. In the year, the Company made a
revenue profit. Under investment trust rules regarding distributable income, a
final dividend must be paid to allow the Company to comply with those rules.
Subject to shareholders’ approval at the forthcoming Annual General Meeting,
a final dividend of 0.6p per share will be paid on 4 October 2024 to
shareholders on the register as of 6 September 2024. The associated
ex-dividend date will be 5 September 2024.
The Board
During the year, Ekaterina (Katya) Thomson, the Chairman of the Audit
Committee, resigned with effect from close of business on 29 December 2023 as
following AVI’s appointment as AIFM and Investment Manager, she was no
longer considered independent. Caroline Gulliver was appointed as independent
non-executive Director and the new Chairman of the Audit Committee with effect
from the close of business on 29 December 2023. The Board is very pleased to
have appointed a new independent Director with extensive accounting and audit
experience.
After the year-end, on 10 July 2024, Hugh van Cutsem also resigned from the
Board of MIGO due to the length of his tenure and other work commitments.
Hugh’s and Katya’s insights and experience will be much missed, but there
is no intention to appoint any further directors for the time being.
At the date of this report, the Board of the Company comprises Richard
Davidson (Chairman), Lucy Costa Duarte, Caroline Gulliver (Chairman of the
Audit Committee and SID) and Ian Henderson. All Directors are independent
non-executive directors.
Katya Thomson served during the year up to her resignation on 29 December
2023. Hugh van Cutsem served throughout the year and up to his resignation on
10 July 2024, Richard Davidson, Lucy Costa Duarte and Ian Henderson served
throughout the year, and Caroline Gulliver since her appointment date, and up
to the signing of this report. Richard, Lucy, Ian and Caroline will stand for
re-election and election respectively at the forthcoming Annual General
Meeting.
Further information on the Directors can be found below.
Board Diversity
The Board is fully supportive of all aspects of diversity and the importance
of having a range of skilled, experienced individuals with relevant knowledge
in order to allow it to fulfil its obligations. Further information on Board
diversity as well as the Board’s diversity policy can be found in the
Corporate Governance Report.
2024 Realisation Opportunity
The Articles contain provisions enabling shareholders to elect to realise all
or part of their holdings of Ordinary shares at three yearly intervals. The
Company intends to administer the 2024 Realisation Opportunity in accordance
with the Articles and the 2024 Realisation Opportunity Document. For further
details of the Realisation Opportunity and the Company’s capital structure,
please refer to the Directors’ Report.
The information on the 2024 Realisation Opportunity in this Annual Report is
not intended to be exhaustive. Shareholders must not rely solely on the
information in this section. Shareholders should read this Annual Report
including the Notice of Annual General Meeting and the Explanatory Notes
thereto, the 2024 Realisation Opportunity Document and the Articles on the
Company’s website: www.migoplc.co.uk in full prior to making any decision as
to whether or not to participate in the 2024 Realisation Opportunity and/or
vote in favour of the Realisation Opportunity Resolutions.
Board Focus and Responsibilities
With the day-to-day management of the Company outsourced to service providers,
the Board’s primary focus at each Board meeting is reviewing the investment
performance and associated matters such as, amongst other things, future
outlook and strategy, gearing, asset allocation, investor relations,
marketing, and industry issues.
In line with its primary focus, the Board retains responsibility for all the
key elements of the Company’s strategy and business model, including:
· investment objective and policy, incorporating the investment guidelines
and limits, and changes to these;
· whether the manager should be authorised to gear the portfolio up to a
pre-determined limit;
· review of performance against the Company’s Key Performance Indicators
(“KPIs”);
· consideration of share issuance and buybacks and premium/discount
management;
· review of the performance and continuing appointment of service providers;
and
· maintenance of an effective system of oversight, risk management and
corporate governance.
Details of the principal KPIs, along with details of the principal risks, and
how they are managed, follow within this business review.
Key Performance Indicators
The Company’s Board of Directors meets at least four times a year. At each
quarterly meeting it reviews performance against a number of key performance
measures
NAV and the movement of the NAV compared with the notional returns available for cash – defined as SONIA plus 2%, the Company’s Benchmark^ The Directors regard the Company’s net asset value (“NAV”) return per share as being the overall measure of value delivered to shareholders over the long term, as opposed to returns available for cash holdings. A full description of performance during the
year under review and the investment portfolio are contained in the Investment Manager’s Review. The NAV total return per share for the year to 30 April 2024 was 11.3% (2023: -9.3%), compared with the Benchmark return of 6.9% (2023: 4.6%).
NAV volatility^ The Company aims to deliver its performance with a lower level of volatility in the NAV than equity markets. For the year to 30 April 2024, the Company’s NAV had a volatility of 6.1% (2023: 8.2%)*, compared with the volatility of the Deutsche Numis All
Share Total Returns Index (inc Investment Companies) of 10.4% (2023: 14.2%).
The movement in the Company’s share price One of the most immediate measures of the value of the Company’s Ordinary shares is their price. The Board regularly considers the Company’s investment performance and other ways in which share price performance may be enhanced, including the effectiveness
of marketing. The Ordinary share price increased by 8.6% (2023: decreased by 10.4%) over the year. Further details are given in the Chairman’s Statement and the Investment Manager’s Review.
Share price in relation to the NAV per share The Board believes that an important driver of an investment trust’s discount or premium over the long term is investment performance together with a proactive marketing strategy. However, there can be volatility in the discount or premium during the year.
Therefore, the Board requests authority each year to buy back and issue shares with a view to limiting the volatility of the share price discount or premium. During the year under review, no new shares were issued by the Company (2023: 410,000). New shares
will only be issued at a premium to the Company’s cum-income net asset value at the time of issue. 1,760,000 shares were bought back during the year (2023: 2,222,459), and 75,000 shares were bought back after the year-end (2023: 550,000). The Company’s
Ordinary share price in relation to the NAV per share during the year ended 30 April 2024 has ranged from a discount of 0.7% (2023: premium of 4.8%) to a discount of 5.8% (2023: 5.7%). At the year end, the shares traded at a discount of 4.6% to the NAV per
share (2023: 3.1% discount). In comparison, the unweighted average discount across the whole investment companies universe was 19.98% (2023: 11.3%) # .
* Source: Frostrow Capital LLP.
^ See Glossary for definition and calculation methodology.
# Source: Deutsche Numis.
Principal Risks, Emerging Risks and Risk Management
The Board considers that the risks detailed within this report are the
principal risks currently facing the Company to deliver its strategy.
The Board is responsible for the ongoing identification, evaluation and
management of the principal risks faced by the Company. The Audit Committee,
on behalf of the Board, has established a process for the regular review of
these risks and their mitigation. This process is in line with the UK
Governance Code and the FRC’s Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting.
During the year ended 30 April 2024, the Audit Committee has carried out a
robust assessment of the emerging and principal risks facing the Company,
including those that would threaten its business model, future performance,
solvency and liquidity. The Committee also considered the controls in place to
mitigate the inherent risks and whether additional controls or actions were
required to bring the residual risk down to an acceptable level. The Committee
was satisfied with the controls that are in place, although it is important to
note that the systems in place cannot eliminate the risk of failure to achieve
the Company’s investment objective.
Further details as well as a summary of the Company’s approach to risk and
how principal risks and uncertainties were dealt with during the year under
review, are set out below. In addition, information about the Company’s risk
assessment and internal control procedures is provided in the Audit Committee
Report.
The principal risks are categorised under the following broad headings:
· investment risks;
· strategic and business risks;
· operational risks; and
· legal, regulatory and tax risks.
Increased Decreased No change
Principal Risk Mitigation
INVESTMENT RISKS
Market and discount risk
The Company aims to capitalise on the opportunities that exist due to inefficiencies in the pricing of closed-end funds and is exposed to fluctuations in the market prices of those funds and their underlying assets. Additionally, the Company is exposed to To manage this risk the Board and the AIFM have appointed the Investment Manager to manage the portfolio within the remit of the investment objective and policy and borrowing limits. Compliance with the investment policy and borrowing limits is monitored on a daily basis by the AIFM and reported to the Board monthly. At the year-end the Company had 6.1% borrowings (2023: none). The Investment Manager monitors the volatility, discount, quality of underlying assets, and level of gearing within the portfolio holdings and potential investments. The results of this feed into the stock selection process and consideration of the portfolio constituents. In addition, the Portfolio Managers report at each Board meeting on the performance of the portfolio, encompassing, inter alia , the rationale for stock selection decisions, the make-up of the portfolio,
the risk that the market price of its investments differs from that of their NAV per share – purchasing funds whose market price is at a discount to NAV per share can result in significant gains on the upside, but can also lead to exposure to poorly and portfolio company updates.
performing companies. The Company may use borrowing, the effect of which would be to amplify the gains or losses the Company experiences. Investors should be aware that by investing in the Company they are exposing themselves to the market risks associated
with owning publicly traded shares, and the additional discount risks specific to investing in closed-end funds.
Cash, Interest rate, Other price, Currency, Liquidity and Credit risk
For information on cash, interest rate, other price, currency, liquidity and credit risk please see Note 16 to the Financial Statements.
STRATEGIC AND BUSINESS RISKS
Company’s business objectives and strategy
The Company and its shareholders are exposed to the risk, particularly if the investment strategy and approach are unsuccessful, that the Company may be viewed unfavourably resulting in a widening of the share price discount to NAV per share. In managing this risk the Board reviews the Company’s investment objective in relation to market and economic conditions and the performance of its peers and discusses at each Board meeting the Company’s future development and strategy. The Board does not
seek to manage the discount on a day-to-day basis but does monitor the trend over longer periods and considers how share price performance may be enhanced, including the effectiveness of marketing and the possibility of share buybacks. Given the size of
the Company the Board is conscious of the impact of share buybacks on liquidity and the ongoing charges of the Company.
Key person risk
The loss of a key employee of the Investment Manager could result in the deterioration of the performance of the Company. The Board considers the make-up of the team supporting the Portfolio Managers as part of its annual review. During the year under review, and following Nick Greenwood’s decision to leave the previous investment manager, Premier Miton, the Board appointed
Asset Value Investors Limited (“AVI”) as the new AIFM and Investment Manager with effect from the close of business on 15 December 2023 following a rigorous selection process. Nick Greenwood and Charlotte Cuthbertson both joined AVI and are again Co
-Portfolio Managers of MIGO. More information on this can be found in the Chairman’s Statement.
Company duration risk
Every three years, the Company’s shareholders may be offered a realisation opportunity at the discretion of the Board. Depending on the structure of the realisation opportunity and the level of take-up, this could reduce the size of the Company to an unattractive level. The Articles contain provisions for Shareholders to elect to realise all or part of their holdings of Ordinary shares at three-yearly intervals. The Board formulates the appropriate manner in which such a realisation opportunity may be offered based on
feedback from the relevant service providers. In particular, the investor sentiment prior to the realisation opportunity in 2021 was monitored by the Investment Manager and the Company’s corporate broker and only 0.55% of MIGO’s issued share capital was
realised and bought back by the Company. The next realisation opportunity will be offered to shareholders in 2024, and more details are available in the Chairman’s Statement, in the Business Review, in the Directors’ Report and in the Notice of AGM and the
Explanatory Notes thereto.
Global Risk
Significant political and economic change in the UK and abroad might lead to volatile markets impacting the Company’s performance and reduced investor appetite for the Company’s shares. Global events, such as another pandemic, acts of war or terrorist attacks, might affect the performance of portfolio companies or result in the Company’s service providers being unable to meet their contractual duties. The continuing uncertainty in the global economy, the ongoing war in Ukraine as well as the more recent war in Gaza, have contributed to inflationary pressures and supply chain disruption world-wide. Political and economic developments both in the UK and world-wide are being monitored and discussed, where relevant, between the Board and the Investment Manager as part of the portfolio review at every Board meeting. Risk is managed by diversification of
investments. The Portfolio Managers maintain a dialogue with the investee companies and monitor the impact of any material events on their business, and updates the Board accordingly.
Ongoing charges risk
The ongoing charges figure (“OCF”) is the charge paid over a year quoted on the ‘Key Investor Information’ (“KID”) document. The OCF has long been considered misleading as it effectively double counts the cost of investing in other investment trusts. A significant portion of MIGO’s OCF is due to costs incurred by the underlying investments and is not an additional cost to MIGO shareholders. Whether actual and underlying costs are presented in one single figure or in a layered approach, many platforms and readers will add them up, and in an industry where low fee levels are sometimes misunderstood as the simplest way to evaluate how value is delivered, this can become a problem. The Board of MIGO, together with many other industry participants, has lobbied the Association of Investment Companies and HM Treasury to intervene to confirm that costs associated with listed investment companies should be excluded from the ‘single
figure’ OCF across all retail product and service categories. This, together with amended legislation, should show companies like MIGO as competitive as they really are. The AIC has made a submission to the FCA, but the recent general election in the UK
and the establishment of a new parliament is likely to delay the resolution of this issue.
OPERATIONAL RISKS
Service provider risk
The Board is reliant on the systems of the Company’s service providers and as such a disruption to, or a failure of, those systems could lead to a failure to comply with law and regulations leading to reputational damage to the Company – either directly or by association with the service provider in question – and/or financial loss. This encompasses disruption or failure caused by cyber crime or hybrid working practices and covers dealing, trade processing, administrative services, financial and other operational functions. To manage these risks the Board: receives reports from the AIFM and Frostrow Capital LLP on compliance with applicable laws and regulations; reviews internal control reports and key policies of the AIFM, Investment Manager, Custodian and Frostrow; reviews
reports from the Depositary; maintains a risk matrix which details the risks to which the Company is exposed and the controls relied upon to manage those risks; and receives updates on pending changes to the legal and regulatory environment and progress
towards the Company’s compliance with any relevant future changes. The service providers of the Company have again confirmed that they have all necessary business continuity procedures in place including enabling staff to work from home, increased IT and
cyber security awareness and holding team and client meetings via video conference calls as and when required. The Board continues to monitor the performance of all service providers.
LEGAL, REGULATORY AND TAX RISKS
ESG and Climate Change Risk
Risks related to the environment, social issues and governance (ESG) such as the impact of climate change or bad governance on portfolio companies, MIGO itself or its service providers could have an adverse impact on operational performance and may lead to a reduction in demand for the Company’s shares as investors seek greater ESG oversight in their portfolios. At every Board meeting, the Board receives updates including information on governance-related issues, from the Portfolio Manager and the Company Secretary. Due to the nature of the Company and its investment policy, any investment decisions can only, at
best, have a limited effect on climate change and ESG issues. Details of the Investment Manager’s ESG approach can be found in the “Responsible Investing” section on AVI’s website www.assetvalueinvestors.com/responsible-investing/.
UK Legal and Regulatory Risk
The Company and/or the Directors might fail to comply with legal requirements in relation to FCA dealing rules and procedures, the UK AIFMD, the Listing Rules, the Companies Act 2006, relevant accounting standards, the Bribery Act 2010, the Criminal Finances Act 2017, the Association of Investment Companies (“AIC”) Statement of Recommended Practice (“SORP”), GDPR, tax regulations or any other applicable regulations. This could result in reputational damage to the Company or in its shares being suspended from listing which would result in a loss of investment trust status and gains within the portfolio being subject to Capital Gains Tax. The Board monitors regulatory change with the assistance of Frostrow and its external professional advisers to ensure compliance with applicable laws and regulations including the Companies Act 2006, the AIFMD, the Corporation Tax Act 2010 (“Section
1158”), the Market Abuse Regulation (“MAR”), the Disclosure Guidance and Transparency Rules (“DTRs”) and the FCA’s Listing Rules. The Board reviews compliance reports and internal control reports provided by its service providers, as well as the Company’s
financial statements and revenue forecasts. The Depositary reports twice yearly to the Audit Committee, confirming that the Company has been managed in accordance with the AIFMD, MIGO’s Articles of Association and with investment restrictions and leverage
limits. The Directors attend seminars and conferences to keep up to date on regulatory changes and receive industry updates from the Company Secretary. The Company Secretary also presents a quarterly report on changes in the regulatory environment,
including AIC updates, and how changes have been addressed.
Emerging Risks
The Company has carried out a detailed assessment of its emerging and
principal risks. The International Risk Governance Council’s definition of
an “emerging” risk is one that is new or is a familiar risk in a new or
unfamiliar context or under new context conditions (re-emerging). Failure to
identify emerging risks may cause reactive actions rather than being proactive
and, in a worst-case scenario, could cause the Company to become unviable or
otherwise fail or force the Company to change its structure, objective or
strategy.
The Audit Committee reviews a risk register twice yearly. Emerging risks are
discussed in detail as part of this process to try to ensure that both
emerging and well-known risks are identified and mitigated as far as possible.
Any emerging risks and mitigations are added to the risk register.
Last year’s emerging risk of a deteriorating economic environment in many
countries, together with inflation, an ongoing cost of living crisis and
increased energy costs, remained with us during the year to the point of
investor appetite in equities reducing dramatically. During the year under
review, the war in Gaza, between Israel and Hamas, has emerged as a new risk
which might lead to wider confrontations in the Middle East with global
impacts as yet unforeseen. Furthermore, elections in many parts of the world,
including the UK, Europe and the US may lead to more uncertainty in the
markets. Finally, technological breakthroughs such as artificial intelligence
(“AI”) can be both an opportunity but also a possible risk in the absence
of robust regulation.
Whilst it is not possible to mitigate the above emerging risks directly, the
Board regularly reviews the premium and discount levels and considers ways in
which share price performance may be enhanced to prevent MIGO becoming
unattractive to shareholders. The Investment Manager, Frostrow and Deutsche
Numis are in regular contact with larger investors to ensure that MIGO’s
objective is still in line with shareholders’ objectives. There are also
regular updates for all shareholders by way of factsheets, annual and
half-yearly reports and other documentation on the Company’s website.
The experience and knowledge of the Directors is useful in these discussions,
as are update papers and advice received from the Board’s key service
providers such as the AIFM and Investment Manager and the Company’s
corporate broker. In addition, the Company is a member of the AIC, which
provides regular technical updates, draws members’ attention to forthcoming
industry and regulatory issues and advises on compliance obligations.
Going Concern
The content of the Company’s portfolio, trading activity, the Company’s
cash balances and revenue forecasts, and the trends and factors likely to
affect the Company’s performance are reviewed and discussed at each Board
meeting.
The Board has considered a detailed assessment of the Company’s ability to
meet its liabilities as they fall due, including tests which modelled the
effects of substantial falls in markets and significant reductions in market
liquidity, on the Company’s NAV, its cash flows and its expenses. Further
information is provided in the Audit Committee Report.
Based on the information available to the Directors at the date of this
report, including the results of these stress tests, the conclusions drawn in
the Long-Term Viability Statement, the Company’s cash balances, and the
liquidity of the Company’s listed investments, the Directors are satisfied
that the Company has adequate financial resources to continue in operation for
at least the next 12 months and that, accordingly, it is appropriate to
continue to adopt the going concern basis in preparing the financial
statements.
The Directors have also considered the fact that shareholders will again be
offered a realisation opportunity later this year with the option to either
retain or realise their investment. However, in view of the good performance
of the Company during the year ended 30 April 2024 it is hoped that following
the realisation opportunity in September 2024, shareholders will have decided
to hold on to their shares and that the net asset value of the ordinary shares
will continue to be more than £30 million, allowing the Company to continue
in operation.
Long-Term Viability Statement
In accordance with the UK Corporate Governance Code, the Directors have
carefully assessed the Company’s current position and prospects as described
in the Chairman’s Statement and the Investment Manager’s Report, as well
as the Principal Risks outlined above and have formed a reasonable expectation
that the Company will be able to continue in operation and meet its
liabilities as they fall due over the next three financial years. The Board
has chosen a three-year horizon in view of the long-term nature and outlook
adopted by the Investment Manager when making decisions while recognising the
limitations and uncertainties inherent in predicting market conditions in
making this assessment.
In addition, the realisation opportunity is offered to shareholders every
three years.
To make the assessment and in reaching the conclusion of long-term viability,
the Audit Committee has considered the Company’s financial position and its
ability to liquidate its portfolio and meet its liabilities as they fall due:
· the portfolio is principally comprised of investments traded on major
international stock exchanges. Based on historic analysis, 79.7% of the
current portfolio could be liquidated within 30 trading days with 56.1% in
seven days under normal market conditions and there is no expectation that the
nature of the investments held within the portfolio will be materially
different in future;
· the expenses of the Company are predictable and modest in comparison with
the assets and there are no capital commitments foreseen which would alter
that position; and
· the Company has no employees, only its non-executive Directors.
Consequently, it does not have redundancy or other employment-related
liabilities or responsibilities.
Stress tests and scenarios which considered the impact of severe stock market
volatility on the Company’s NAV, expenses, cash flows and ability to meet
its liabilities were undertaken. The results demonstrated that even in the
most stressed scenario MIGO would have sufficient cash or would be able to
liquidate a sufficient portion of its listed holdings, in order to be able to
meet its liabilities as they fall due. Based on the information available to
the Directors at the time, it was concluded that it was reasonable for the
Board to expect that the Company will be able to continue in operation and
meet its liabilities as they fall due over the next three financial years.
The Directors have also considered the fact that the majority of shareholders
decided to hold on to their shares following the Realisation Opportunity in
September 2021, with the result that the net asset value of the Company
continued to be more than £30 million, allowing the Company to continue in
operation. The Directors also consider this to give a positive outlook towards
this year’s Realisation Opportunity. For more details about the Company’s
capital structure and the 2024 Realisation Opportunity, please refer to the
Directors’ Report.
Finally, AVI as the Company’s new AIFM and investment manager is not
proposing to change MIGO’s existing investment objective and policy.
Established in 1985, AVI is an experienced manager of investment trusts, and
the Board expects MIGO to benefit from AVI’s deep sector expertise and
supportive analyst resource as well as its distribution and marketing
channels. Further information can be found in the Chairman’s Statement.
The Audit Committee considers the potential impact of the Company’s
principal risks and various severe, but plausible, downside scenarios, as well
as the following assumptions in considering the Company’s longer-term
viability:
· there will continue to be demand for investment trusts;
· investors will wish to continue to have exposure to the type of companies
that the Company invests in, namely closed-end investment funds;
· the Board and the Investment Manager will continue to adopt a long-term
view when making investments;
· the threats to the Company’s solvency or liquidity incorporated in the
Principal Risks will be managed or mitigated as outlined above;
· regulation will not increase to a level that makes running the Company
uneconomical; and
· the performance of the Company will continue to be satisfactory.
The continuing uncertainty in the global economy, the ongoing war in Ukraine
as well as the more recent war in Gaza, have contributed to supply chain
disruption and inflationary pressures world-wide. These were factored into the
key assumptions made by assessing their impact on the Company’s key risks
and whether the key risks had increased in their potential to affect the
normal, favourable and stressed market conditions. As part of this review, the
Board considered the impact of a significant and prolonged decline in the
Company’s performance and prospects. This included a range of severe but
plausible downside scenarios such as reviewing the effects of substantial
falls in investment values and the impact of the Company’s ongoing charges
ratio, which were the subject of stress testing.
Furthermore, the Audit Committee considered the operational resilience of the
Company’s service providers, and thereby the operational viability of the
Company. During the year under review all key service providers have again
been contacted with regard to their business continuity systems as well as
their IT and cyber security systems to prevent fraudulent activity of any
kind. No issues were raised and the Audit Committee was reassured that all key
service providers were operating well and to their normal high service
standards.
Based on the results of this review, the Directors have formed a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the next three financial years.
Management Arrangements
AIFM and Investment Manager
Asset Value Investors Limited (“AVI”) is the Company’s new Alternative
Investment Fund Manager (“AIFM”) and Investment Manager under an
Investment Management Agreement (“IMA”) dated 26 July 2023. AVI took over
from Premier Portfolio Managers Limited and Premier Fund Managers Limited
(collectively: “Premier Miton”) as AIFM and Investment Manager
respectively with effect from the close of business on 15 December 2023.
Under the terms of the IMA, the AIFM and Investment Manager provides, inter
alia, the following services:
· risk management services;
· monitoring the Investment Manager’s compliance with the Company’s
investment objective and investment policy and reporting any non-compliance in
a timely manner to the Investment Manager and the Board;
· determining the net asset value per share on a daily basis;
· maintaining professional indemnity insurance at the level required under
the AIFM Rules;
· preparing the monthly factsheets for the Company;
· upholding compliance with applicable tax, legal and regulatory
requirements;
· seeking out and evaluating investment opportunities;
· deciding the manner by which monies should be invested, divested, retained
or realised;
· deciding how rights conferred by the investments should be exercised;
· analysing the performance of investments made; and
· advising the Company in relation to trends, market movements and other
matters which may affect the investment objective and policy of the Company.
The management fee payable to the AIFM is calculated at an annual rate of
0.65% of the adjusted market capitalisation of the Ordinary Shares and 0.5% of
the adjusted market capitalisation of any Realisation Shares in issue at the
time. If the Company as a whole moves to a realisation basis then the AIFM
will be paid 0.5% of the adjusted market capitalisation of the Company as a
whole. Following the realisation opportunity in 2021, there are no Realisation
Shares in issue. The management fee accrues daily and is payable in arrears
monthly.
The fees under the new IMA are unchanged from the fees under the previous one.
The new IMA with AVI also mirrors the agreement that MIGO previously had with
Premier Miton in all material aspects.
Details of the fees paid to the old and new AIFM for their services during the
year are set out in note 3 to the Financial Statements.
The Company invests in AVI Japan Opportunity Trust plc (AJOT”), another
investment trust company managed by AVI. The Company does not pay management
fees on the value of its investment in AJOT.
The IMA may be terminated by six months’ written notice from either party
subject to the provisions for earlier termination as set out therein.
There are no specific provisions contained within the IMA relating to
compensation payable in the event of termination of the agreement other than
the entitlement to fees which would be payable within any notice period.
Continuing Appointment of the AIFM and Investment Manager
The Board, through the Management Engagement Committee, keeps the performance
of the AIFM and Investment Manager under review. Although AVI only took over
from the previous Managers in mid-December 2023, it is the opinion of the
Directors that the new relationship with AVI is working well and that the
appointment of AVI as AIFM and Investment Manager is in the interests of
shareholders as a whole. In coming to this decision, the Board took into
consideration, inter alia, the following: that Nick Greenwood has been the
Company’s lead portfolio manager since launch, that Charlotte Cuthbertson is
an excellent co-manager of the Company, the investment performance of MIGO is
encouraging relative to that of the markets in which the Company invests, and
the remuneration of the AIFM and Investment Manager is reasonable. The
Directors believe that by paying the management fee on a market capitalisation
basis, rather than a percentage of assets basis, the interests of the AIFM and
Investment Manager are more closely aligned with those of shareholders.
Company Secretary, Marketing and Administration
Company secretarial, marketing, and administrative services are provided by
Frostrow Capital LLP (“Frostrow”) under an agreement dated 1 February 2016
and novated on 24 April 2020 and 27 July 2023. An annual management services
fee of 25 basis points of the adjusted market capitalisation of the Company,
charged quarterly in arrears, is payable, subject to a minimum annual fee of
£120,000. Frostrow’s fees will reduce from 25 basis points to 20 basis
points on market capitalisation of the Company in excess of £100 million. The
agreement may be terminated by either party on six months’ written notice.
Frostrow provides the following services, inter alia, under its agreement with
the Company:
· marketing and shareholder services;
· administrative and company secretarial services;
· advice and guidance in respect of corporate governance requirements;
· maintenance of the Company’s accounting records together with Link
Group, to which a number of accounting functions have been delegated;
· preparation of the annual and half yearly reports; and
· ensuring compliance with applicable legal and regulatory requirements.
In light of the high level of service provided by Frostrow in these areas, it
is the opinion of the Directors that the continuing appointment of Frostrow is
in the best interest of shareholders.
Details of the fees paid to Frostrow for their services during the year are
set out in note 4 to the Financial Statements.
Company Promotion
The Company has appointed Frostrow to promote the Company’s shares to
professional investors in the UK. As Investment Company Specialists, the
Frostrow team provides a continuous, pro-active marketing, distribution and
investor relations service that aims to promote the Company by encouraging
demand for the shares.
Frostrow actively engages with professional investors, typically discretionary
wealth managers, some institutions and a range of execution-only platforms.
Regular engagement helps to attract new investors and retain existing
shareholders, and over time results in a stable share register made up of
diverse, long-term holders.
Frostrow arranges and manages a continuous programme of one-to-one meetings
with professional investors around the UK. These include regular meetings with
“gate keepers”, the senior points of contact responsible for their
respective organisations’ research output and recommended lists. The
programme of regular meetings also includes autonomous decision makers within
large multi-office groups, as well as small independent organisations. Some of
these meetings involve the Investment Manager, but most of the meetings do
not, which means the Company is being actively promoted while the Investment
Manager concentrates on managing the portfolio.
The Company also benefits from involvement in the regular professional
investor seminars run by Frostrow in major centres, notably London and
Edinburgh, or webinars which are focused on buyers of investment companies.
Frostrow produces many key corporate documents, including annual and
half-yearly reports. All Company information and invitations to investor
events, including updates from the Investment Manager on portfolio and market
developments, are regularly emailed to a growing database, overseen by
Frostrow, consisting of professional investors across the UK.
Frostrow maintains close contact with all the relevant investment trust broker
analysts, particularly those from Deutsche Numis, the Company’s corporate
broker, but also others who publish and distribute research on the Company to
their respective professional investor clients.
Kaso Legg Communications Ltd, a specialist PR agency, has also been appointed
to support the Board’s engagement with stakeholders.
The Company continues to benefit from regular press coverage, with articles
appearing in respected publications that are widely read by both professional
and self-directed private investors. The latter typically buy their shares via
retail platforms, which account for a significant proportion of the
Company’s share register.
Depositary and Custodian
J.P.Morgan Europe Limited was appointed as Depositary under an agreement dated
11 October 2023 (the “Depositary Agreement”), taking over from the Bank of
New York Mellon (International) Limited with effect from the close of business
on 15 December 2023. The Depositary Agreement is terminable on 90 calendar
days’ notice from either party.
JPMorgan Chase Bank, N.A., London Branch, has been appointed as the
Company’s Custodian under an agreement dated 11 October 2023 (the “Custody
Agreement”), taking over from the Bank of New York Mellon (International)
Limited with effect from the close of business on 15 December 2023. Following
an initial term of three years, the Custody Agreement may be terminated by the
Company by giving 60 calendar days’ notice and by the Custodian by giving
180 days’ notice.
The Board thanks the Bank of New York Mellon (International) Limited for their
work on behalf of MIGO over the years and for their help in providing a smooth
transition of depositary and custody duties to JP Morgan, who have a
long-standing relationship with AVI.
Stakeholder Interests and Board Decision-Making (Section 172 Statement)
The Directors’ overarching duty is to act in good faith and in a way that is
the most likely to promote the success of the Company as set out in Section
172 of the Companies Act 2006. In doing so, Directors must take into
consideration the interests of the various stakeholders of the Company, the
impact the Company has on the community and the environment, take a long-term
view on consequences of the decisions they make as well as aiming to maintain
a reputation for high standards of business conduct and fair treatment between
the members of the Company.
Fulfilling this duty naturally supports the Company in achieving its
investment objective and helps to ensure that all decisions are made in a
responsible and sustainable way. In accordance with the requirements of the
Companies (Miscellaneous Reporting) Regulations 2018, the Company explains how
the Directors have discharged their duty under Section 172 below.
To ensure that the Directors are aware of, and understand, their duties they
are provided with the pertinent information when they first join the Board as
well as receiving regular and ongoing updates and training on the relevant
matters. Induction and access to training is provided for new Directors. They
also have continued access to the advice and services of the Company Secretary
and, when deemed necessary, the Directors can seek independent professional
advice at the Company’s expense. The schedule of Matters Reserved for the
Board, as well as the Terms of Reference of its committees, are reviewed on an
annual basis and further describe Directors’ responsibilities and
obligations and include any statutory and regulatory duties. The Audit
Committee has the responsibility for the ongoing review of the Company’s
risk management systems and internal controls and, to the extent that they are
applicable, risks related to the matters set out in Section 172 are included
in the Company’s risk register and are subject to periodic and regular
reviews and monitoring.
Stakeholders
A company’s stakeholders are normally considered to comprise its
shareholders, its employees, its customers, its suppliers as well as the wider
community in which the company operates and impacts. The Company is different
in that as an externally managed investment trust it has no employees and,
significantly, its customers are synonymous with its shareholders. In terms of
suppliers, the Company receives professional services from a number of
different service providers, principal among them being the Investment
Manager. The Directors believe that fostering constructive and collaborative
relationships with the Company’s service providers will assist in their
promotion of the success of the Company for the benefit of all shareholders.
The Board engages with representatives from its service providers throughout
the year. Representatives from the Investment Manager and Frostrow are in
attendance at each Board meeting. The services provided by the Investment
Manager and the Company Secretary and Administrator respectively, are
fundamental to the long-term success of the Company. Furthermore, the Board
believes that the wider community in which the Company operates encompasses
its portfolio of investee companies and the communities in which they operate.
Details of how the Board considers the needs and priorities of the Company’s
stakeholders and how these are taken into account during all its discussions
and as part of its decision-making are detailed below. All discussions involve
careful considerations of the longer- term consequences of any decisions and
their implications for stakeholders.
Further details are set out below:
WHO? WHY? HOW?
Stakeholder group The benefits of engaging with the company’s stakeholders How the board, the portfolio manager and administrator have engaged with the company’s stakeholders
Investors Continued shareholder support and engagement are critical to the continued existence of the Company and the delivery of its long-term strategy. Clear communication of the Company’s strategy and the performance against the Company’s objective can help the share price trade at a narrower discount or a wider premium to its net asset value per share which benefits shareholders. New shares can be issued to meet demand without diluting net asset value per share for existing shareholders. Increasing the size of the Company can benefit liquidity as well as spread costs. In an effort to moderate the discount at which shares trade to their net asset value per share, the Company can buy back shares if the Board considers this to be in the best interest of the Company and shareholders as a whole. Shares can either be held in “treasury” or cancelled. Any shares held in treasury can later be sold in the market if conditions permit. The Company does not currently hold any shares in treasury. The Investment Manager, Frostrow and the Company’s corporate broker, on behalf of the Board, complete a programme of investor relations throughout the year. An analysis
of the Company’s shareholder register is provided to the Directors at each Board meeting along with marketing reports from Frostrow. The Board reviews and considers the
marketing plans on a regular basis. Reports from the Company’s corporate broker on investor sentiment and industry issues are submitted to the Board. Key mechanisms of
engagement include: · the Annual General Meeting where shareholders have the opportunity to meet the Directors and Portfolio Managers and to ask questions; · the Annual
and Interim Reports of the Company, providing investors with a clear understanding of MIGO’s strategy, portfolio and financial position; · the daily publication of the
net asset value per share; · Stock Exchange announcements; · the Company’s website which hosts reports, video interviews with the portfolio managers and monthly
newsletters; and · one-on-one investor meetings and online webinars. During the year, shareholders were kept up to date with news regarding the search for a new AIFM and
Investment Manager through Stock Exchange announcements.
Investment Manager The relationship with the Investment Manager is fundamental to ensuring the Company meets its investment objective. Engagement with the Company’s Investment Manager is necessary to evaluate its performance against the Company’s stated strategy and to understand any risks or opportunities this may present. Engagement also helps ensure that Investment Management costs are closely monitored and remain competitive. The Board meets regularly with the Company’s Investment Manager throughout the year both formally at the scheduled Board meetings and informally as needed. The Board also
receives monthly performance and compliance reporting. The Investment Manager’s attendance at each Board meeting provides the opportunity for the Investment Manager and
Board to further reinforce their mutual understanding of what is expected from both parties.
Service Providers The Company contracts with third parties for other services including: depositary, custodian, investment accounting & administration as well as company secretarial and registrars. The Company ensures that the third parties to whom the services have been outsourced complete their roles in line with their service level agreements, thereby supporting the Company in its success and ensuring compliance with its obligations. The Board and Frostrow engage regularly with other service providers both in one-to-one meetings and via regular written reporting. Representatives from service providers
are asked to attend Board and Audit Committee meetings when deemed appropriate. This regular interaction provides an environment where topics, issues and business
development needs can be dealt with efficiently and collegiately.
Portfolio Companies Gaining a deeper understanding of the portfolio companies and their strategies assists in understanding and mitigating risks of an investment as well as identifying future potential opportunities. Day-to-day engagement with portfolio companies is undertaken by the Investment Manager. Details of how the Investment Manager carries out portfolio management as well as
information on its investment approach can be found in the Investment Manager’s Report. The Board receives updates at each scheduled Board meeting from the Portfolio
Managers on specific investments including regular valuation reports and detailed portfolio and returns analyses. The Investment Manager’s engagement with portfolio
companies includes active voting at their annual general meetings, discussions with their stakeholders and on-site visits where appropriate.
WHAT? OUTCOMES AND ACTIONS
What were the key topics of engagement? What actions were taken, including principal decisions?
Key topics of engagement with investors
* Ongoing dialogue with shareholders concerning the strategy of the Company, performance and the portfolio. * The Investment Manager, Frostrow and the Company’s corporate broker meet regularly with shareholders and potential investors to discuss the Company’s strategy, performance, the portfolio and any other issues which might be raised.
* Ongoing dialogue about the impact of regulation and cost disclosures. * Board lobbying of the AIC and HMRC (please see Chairman’s Statement).
* During the year, investors were also kept informed via Stock Exchange announcements and the annual report in respect of the search for a new AIFM and Investment Manager. * Shareholders are provided with performance updates via the Company’s website as well as the usual financial reports, monthly factsheets, Stock Exchange announcements and podcasts.
* Asset Value Investors Limited (“AVI”) was appointed as MIGO’s new AIFM and Investment Manager.
Key topics of engagement with the Investment Manager on an ongoing basis
* Portfolio composition, performance, outlook and business updates as well as any particular issues of engagement with portfolio companies. * Updates are received by the Directors at every Board meeting and throughout the year in respect of economic and other factors which might impact on investment decision making.
* Team composition * Events world-wide and their impact on markets and the Company’s portfolio in particular, are also being kept under observation by the Board and the Portfolio Managers.
* The impact of macro events on their business and the portfolio. * During the year under review, the Board of MIGO appointed AVI as the new AIFM and Investment Manager to take over from Premier Miton and implement the Company’s existing investment objective and policy. Further information can be found in the Chairman’s Statement.
* The impact of regulation and cost disclosures.
Other Service Providers
* During the year ended 30 April 2024, the Bank of New York Mellon (International) Limited (“BNYM”) informed the Board that, following a move of Investment Manager from Premier Miton to AVI, it did not wish to continue as Depositary and Custodian to MIGO. * Following the resignation of BNYM, the Board appointed JPMorgan Europe Limited and JPMorgan Chase Bank, N.A., London Branch as the Company’s new Depositary and Custodian, respectively. Further information can be found in the Business Review.
* The Directors have frequent engagement with the Company’s other service providers through the annual cycle of reporting and due diligence meetings or discussions held by Frostrow on behalf of the Board. This engagement is completed with the aim of * No specific action is currently required as the reviews of the Company’s other service providers have been positive and the Directors believe their continued appointment is in the best interests of the Company.
maintaining an effective working relationship and oversight of the services provided.
Portfolio Companies
The Investment Manager, on behalf of the Board, has engaged with a number of portfolio companies: * in order to create value for shareholders, mainly to tighten discounts or to provide liquidity. * In order to achieve better liquidity, the Investment Manager has lobbied a number of portfolio companies for increasing buybacks and changes in capital structure.
* in order to address ESG matters including climate change. Many trusts have to deal with increasing environmental legislation and are already working hard to improve their credentials. * The Investment Manager is aware that trusts perceived to be falling behind in ESG, including climate change concerns may be downrated by investors. This issue therefore makes up an important part of the risk assessment when looking at possible investments.
* in order to achieve good governance overall, as good governance means that board and management of portfolio companies are aware and proactive in their approach to all environmental and social issues. * For the Investment Manager good governance is the best way to ensure best value for shareholders. To this end, environmental and social factors as well as governance are discussed in meetings with managements.
For more information about the Investment Manager’s engagement with portfolio companies, please see the Investment Manager’s Report.
Culture and Business Ethics
The Directors agree that establishing and maintaining a healthy corporate
culture among the Board members and in its interaction with the Investment
Manager, other service providers and shareholders supports the delivery of the
Company’s goals. The Board seeks to promote a culture of openness, debate
and integrity through ongoing dialogue and engagement with all stakeholders.
The Company is committed to carrying out business in an honest and fair manner
with a zero-tolerance approach to bribery, tax evasion and corruption. As
such, policies and procedures are in place to prevent these. As detailed in
the Governance section, the Company has a number of policies and procedures in
place to assist with maintaining a culture of good governance including those
relating to diversity and Directors’ conflicts of interest. The Board
assesses and monitors compliance with these policies as well as the general
culture of the Board through Board meetings and, in particular, the annual
evaluation process which is undertaken by each Director (for more information
please see the performance evaluation section in the Corporate Governance
Report).
The Board strives to ensure that its culture is in line with the Company’s
purpose, values and strategy. It also seeks to appoint the best possible
service providers, including the Investment Manager, and evaluates their
remit, performance and cost effectiveness on a regular basis. The Board
considers the culture of the Investment Manager and other service providers,
including their policies, practices and behaviour, through regular reporting
from these stakeholders and, in particular, during the annual review of the
performance and continuing appointment of all service providers through its
Management Engagement Committee.
Environmental, Human Rights and Social Issues
The Company has no employees and the Board consists entirely of non-executive
Directors. Day-to-day management of the Company’s business is delegated to
the Investment Manager. As an investment trust that invests in other funds,
the Company has very limited direct impact on the community or the environment
and therefore the Company itself has no environmental, human rights, social or
community policies. However, the Company acknowledges that it can have an
indirect impact on the community or the environment, based on the portfolio
companies that the Investment Manager invests in. Therefore, ESG matters
including climate change are frequently discussed in meetings with portfolio
companies, and are also part of the risk assessment when deciding on whether
an investment should be made. For further details please see the Investment
Manager’s Report and the Business Review.
As an investment company, the Company does not provide goods or services in
the normal course of business and does not have customers. All its operational
functions are outsourced to third-party service providers. Accordingly, the
Company falls outside the scope of the Modern Slavery Act 2015. The
Company’s suppliers are typically professional advisers and the Company’s
supply chains are considered low risk in this regard. In carrying out its
activities and in relationships with suppliers, the Company aims to conduct
itself responsibly, ethically and fairly.
The Board expects its principal service providers also to have appropriate
governance policies in place.
Taskforce for Climate-Related Financial Disclosures (“TCFD”)
The Company notes the TCFD recommendations on climate-related financial
disclosures. The Company is an investment trust with no employees, internal
operations or property and, as such, it is exempt from the Listing Rules
requirement to report against the TCFD framework.
The Company does not have explicit sustainability investment objectives or
policies and will not seek to apply a sustainability label under the FCA’s
UK Sustainability Disclosure Requirements and investment labels regime
(“SDR”).
AVI reports on its own environmental, social and governance (“ESG”)
objectives and approach on their website
www.assetvalueinvestors.com/responsible-investing/
AVI also became supporters of the TCFD in May 2021 and a signatory to the
UN-supported Principles for Responsible Investment (“PRI”) on 9 April
2021. The PRI is the world’s leading proponent of responsible investment
which entails the following commitments:
· to incorporate ESG issues into investment analysis and decision making
processes;
· to be an active owner and incorporate ESG issues into our ownership
policies and practices;
· to seek appropriate disclosure on ESG issues by the entities in which we
invest;
· to promote acceptance and implementation of the PRI within the investment
industry;
· to work with the PRI Secretariat and other signatories; and
· to report on our activities and progress towards implementing the PRI.
The risks associated with climate change represent an increasingly important
issue and the Board of MIGO and the Investment Manager are aware that the
transition to a low-carbon economy will affect all businesses, irrespective of
their size, sector or geographic location. Therefore, no company’s revenues
are immune and the assessment of such risks must be considered within any
effective investment approach.
Performance and Future Developments
The Board concentrates its attention on the Company’s investment
performance, the Investment Manager’s investment approach and on factors
that may have an effect on this approach.
The Board monitors the performance of the Company’s investment portfolio in
relation to the Investment Objective and also its peer group.
The Board is regularly updated by Frostrow on wider investment trust industry
issues and regular discussions are held concerning the Company’s future
development and strategy.
A review of the Company’s year ended 30 April 2024, its performance and the
outlook for the Company can be found in the Chairman’s Statement and in the
Investment Manager’s Review.
The Company’s overall strategy remains unchanged.
For and on behalf of the Board of Directors
Richard Davidson
Chairman
24 July 2024
Governance
Board of Directors at the time of publication of this annual report
RICHARD DAVIDSON
Independent Non-Executive Chairman and Chair of Management Engagement
Committee
Joined the Board on 18 December 2017 and became Chairman on 5 October 2018
Richard is also the Chairman of the Management Engagement Committee
Shareholding in the Company
87,000
Skills and Experience
Formerly, he was a partner and manager of the Macro Fund at Lansdowne
Partners. Prior to that, he was a managing director and No. 1 ranked
investment strategist at Morgan Stanley, where he worked for 15 years.
Other Appointments
Richard is currently chairman of Aberforth Smaller Companies Trust plc, and of
Foresight Sustainable Forestry Company PLC, and chair of the University of
Edinburgh’s Investment Committee.
Standing for re-election
Yes
CAROLINE GULLIVER
Independent Non-Executive Director and Chair of Audit Committee
Joined the Board on 29 December 2023
Caroline is the Chairman of the Audit Committee and Senior Independent
Director
Shareholding in the Company
10,000
Skills and Experience
Formerly an Executive Director with EY, Caroline spent a 25 year career
working with investment trusts and open ended investment companies, including
audit, fund launches, reconstructions and mergers.
She is a member of the Institute of Chartered Accountants of Scotland (CA).
Other Appointments
She is currently a non-executive director and chairman of the audit committee
of JP Morgan Global Emerging Markets Income Trust plc, International
Biotechnology Trust plc and abrdn European Logistics Income plc.
Standing for election
Yes
LUCY COSTA DUARTE
Independent Non-Executive Director
Joined the Board on 1 November 2022
Shareholding in the Company
6,115
Skills and Experience
Lucy is a specialist in marketing strategy and investor relations in the
investment trust sector. Formerly a director at Citigroup heading the emerging
markets ECM team in London, she left Citigroup in 2007 and took a career break
to raise her children, before starting work at SV Health Investors in 2016 as
Head of Product for International Biotechnology Trust Plc.
Other Appointments
She is currently working part-time for Schroder Unit Trusts Limited, the
managers of International Biotechnology Trust plc, and is a non-executive
director of Fidelity Asian Values plc.
Standing for re-election
Yes
IAN HENDERSON
Independent Non-Executive Director
Joined the Board on 1 November 2022
Shareholding in the Company
6,115
Skills and Experience
Ian is an advertising professional, formerly a creative director at Publicis
Groupe then CEO of subsidiary Masius. In 2008 he set up a new agency for
Engine Group before leading an MBI to start specialist agency AML in 2011
which works with many firms in the finance sector in the UK and
internationally.
Other Appointments
He is currently CEO of AML, which has recently been acquired by Selbey
Anderson, the UK’s fastest-growing marketing services group, of which Ian is
now also chief creative officer.
Standing for re-election
Yes
All independent Directors serve on both the Audit Committee and the Management
Engagement Committee.
Directors’ Report
The Directors present this Annual Report on the affairs of the Company
together with the audited financial statements and the Independent Auditors’
Report for the year ended 30 April 2024.
In accordance with the requirement for the Directors to prepare a Strategic
Report and a Directors’ Remuneration Report for the year ended 30 April
2024, the following information is set out in the Strategic Report: a review
of the business of the Company including details of its objective, strategy
and business model, future developments, details of the principal risks and
uncertainties associated with the Company’s activities (including the
Company’s financial risk management objectives and policies), interaction
with stakeholders, information regarding community, social, employee and human
rights, and environmental issues.
Information about the Directors’ interests in the Company’s ordinary
shares is included within the Directors’ Remuneration Report.
The Corporate Governance Statement forms part of this Directors’ Report.
Business and Status of the Company
The Company is registered in England as a public limited company (registration
number 05020752) and is an investment company as defined under Section 833 of
the Companies Act 2006 (the “Act”). Its shares are premium listed on the
Official List of the UK Listing Authority and traded on the main market of the
London Stock Exchange, which is a regulated market as defined in Section 1173
of the Act.
The principal activity of the Company is to carry on business as an investment
trust. The Company has been granted approval from HM Revenue & Customs as an
investment trust under Section 1158 of the Corporation Tax Act 2010. The
Company will be treated as an investment trust company subject to the
Company’s continued compliance with applicable laws and regulations. The
Directors do not envisage any change in this activity in the future.
The Company is a member of the Association of Investment Companies
(“AIC”).
Alternative Performance Measures
The financial statements set out the required statutory reporting measures of
the Company’s financial performance. In addition, the Board assesses the
Company’s performance against a range of criteria which are viewed as
particularly relevant for the Company and investment trusts, which are
summarised under “Financial Highlights” at the beginning of this document
and explained in greater detail in the Strategic Report, under the heading
‘Key Performance Indicators’.
The Directors believe that these measures enhance the comparability of
information between reporting periods and aid investors in understanding the
Company’s performance. The measures used for the year under review have
remained consistent with the prior year.
Definitions of the terms used and the basis of calculation adopted are set out
in the Glossary.
Directors
The Directors in office during the whole year and up to the date of this
report are Richard Davidson, Lucy Costa Duarte and Ian Henderson. Caroline
Gulliver joined the Board with effect from the close of business on 29
December 2023 and has been in office since then. All current directors’
biographical details as well as interests in the Company can be found above.
Katya Thomson resigned from the Board with effect from the close of business
on 29 December 2023 as, following the appointment of AVI as MIGO’s new AIFM
and Investment Manager, she could no longer be considered independent under
the AIC’s Code of Corporate Governance, as she also sits on the board of
another AVI investment trust. Hugh van Cutsem resigned from the Board with
effect from 10 July 2024, to focus on other business interests. Having been on
the Board since 18 December 2017 and 31 March 2010 respectively, both Katya
and Hugh’s experience and insights will be missed and the Board wishes them
well for the future.
None of the Directors nor any persons closely associated with them had a
material interest in the transactions, arrangements and agreements of the AIFM
or the Investment Manager during the year. For information on related parties
please see note 17 to the Financial Statements.
The Board has adopted a policy whereby all Directors are required to stand for
re-election annually, regardless of their length of tenure.
The Board has concluded, following formal performance evaluation, that each of
the Directors continues to demonstrate effectiveness, a high level of
commitment to the Company, independence from the Investment Manager and a keen
desire to act in the best interests of the shareholders as a whole.
Furthermore, the Board considers that the experience, expertise and knowledge
contributed by each Director is of notable benefit to the Company.
Accordingly, the Board recommends the re-election or election, respectively,
of each of the Directors at the forthcoming Annual General Meeting
(“AGM”), details of which are set out at the back of this document.
Directors’ and Officers’ Liability Insurance Cover
Directors’ and Officers’ liability insurance cover was maintained by the
Board during the year ended 30 April 2024. It is intended that this policy
will continue for the year ending 30 April 2025 and subsequent years.
There are no qualifying third party indemnity provisions in place.
Substantial Interests in the Company’s Share Capital
The Directors have been informed of the following substantial interests in the
Company’s voting rights as at 30 April and 30 June 2024, the latter being
the latest practicable date before publication of the Annual Report:
Number of ordinary % of
As at 30 April 2024 shares held voting rights
Hargreaves Lansdown, stockbrokers (EO) 2,832,016 12.57
AJ Bell, stockbrokers (EO) 2,451,115 10.87
Interactive Investor (EO) 2,035,801 9.03
Raymond James Investment Services 1,489,707 6.61
Transact (EO) 1,229,188 5.46
Quai Investment Services 1,153,904 5.12
Charles Stanley 1,065,759 4.73
Canaccord Genuity Wealth Management (ND) 839,735 3.72
Rathbones 743,804 3.30
Evelyn Partners (Retail) 684,601 3.04
EO = execution only
ND = non-discretionary
Number of ordinary % of
As at 30 June 2024 shares held voting rights
Hargreaves Lansdown, stockbrokers (EO) 2,860,203 12.69
AJ Bell, Stockbrokers (EO) 2,436,326 10.81
Interactive Investor (EO) 2,143,684 9.51
Raymond James Investment Services 1,532,564 6.80
Transact (EO) 1,231,208 5.46
Charles Stanley 1,038,167 4.61
Quai Investment Services 949,687 4.22
Cannacord Genuity Wealth Management (ND) 814,545 3.61
Rathbones 740,804 3.29
EO = execution only
ND = non-discretionary
Beneficial Owners of Shares – Information Rights
The beneficial owners of shares who have been nominated by the registered
holder of those shares to receive information rights under Section 146 of the
Companies Act 2006 are required to direct all communications to the registered
holder of their shares rather than to the Company’s registrar, Computershare
Investor Services PLC, or to the Company directly.
Securities Carrying Voting Rights
There are no restrictions concerning the transfer of securities in the
Company; no special rights with regard to control attached to securities; no
arrangements known to the Company between holders of securities that may
restrict the transfer of securities; and no agreements to which the Company is
party that might affect its control following a successful takeover bid.
Capital Structure and 2024 Realisation Opportunity
As at the date of this report, the Company’s share capital comprises
22,462,797 Ordinary shares of 1p each with one vote per share. The Company’s
articles of association (“Articles”) contain provisions enabling
shareholders to elect at three-year intervals for the realisation of all or
part of their holdings of Ordinary Shares ("Realisation Opportunity"). The
last Realisation Opportunity was offered in September 2021 and the Company is
therefore making available a Realisation Opportunity in September 2024 (the
"2024 Realisation Opportunity") and the necessary approvals will be sought at
this year's AGM.
The Articles give the Company flexibility as to how it chooses to deliver each
Realisation Opportunity. The Articles provide that the Company may, at the
Board’s discretion, make available to shareholders the opportunity to make
an election to request that all or part of the Ordinary shares they hold be
placed, repurchased, or purchased out of the proceeds of an issue of new
Ordinary Shares, or purchased under a tender offer or by a market maker (a
“Realisation Sale Election”). However, if Realisation Sale Elections
cannot be satisfied in their entirety through the placing and/or repurchase
mechanism(s), all remaining elected shares will be converted into realisation
shares (“Realisation Shares”) instead. The Articles also provide that, if
the Company does not make available to shareholders an opportunity to make a
Realisation Sale Election, shareholders may instead serve an election
requesting that all or part of their Ordinary shares be converted into
Realisation Shares.
Following any re-designation of Ordinary shares into Realisation Shares, the
Company's portfolio will be split into two pools, which will be accounted for
as two separate sub-portfolios, being (i) the continuation pool and (ii) the
realisation pool, pro rata as nearly as practicable to the number of
continuing Ordinary shares and Realisation Shares respectively in existence as
at the date on which the share capital of the Company is reorganised.
Assets and liabilities will be allocated between the continuation pool and the
realisation pool in such manner as in the Board's opinion best achieves the
objective of splitting the Company's assets fairly between the continuation
pool and the realisation pool. In particular, the Board may increase the
proportion of cash to be allocated to a particular pool if it considers it
would be equitable to both holders of Realisation Shares and continuing
Ordinary shares to do so, or if it determines that it is necessary or
desirable to retain cash for the Company's working capital purposes, it may
decrease the proportion of cash to be so allotted and the Board may choose an
alternative allocation, or subsequently rebalance the pools, in respect of
non-cash assets if it considers a pro rata allocation to be impracticable or
that to do so would be equitable to both holders of Realisation Shares and
continuing Ordinary shares.
The costs and expenses of re-designating any elected shares as Realisation
Shares and the costs and expenses of admitting Realisation Shares to trading
on the London Stock Exchange and of preparing and publishing any required
prospectus in connection with the above will be borne by the realisation pool.
The costs and expenses relating to the realisation of assets comprising the
realisation pool will be attributed to the realisation pool also.
The continuation pool will be managed in accordance with the Company's current
investment objective and policy, whilst the realisation pool will be managed
in accordance with an orderly realisation programme with the aim of making
progressive returns of cash to holders of Realisation Shares. The precise
mechanism for any return of cash to holders of Realisation Shares will depend
upon the relevant factors prevailing at the time and will be determined at the
discretion of the Board, but may include a combination of capital
distributions, share buybacks and tender offers. The price of shares purchased
by the Company may be paid out of the share capital, share premium, retained
earnings or any other source to the fullest extent permitted under the
Companies Act 2006.
The creation of Realisation Shares and the splitting of the Company’s
portfolio into the continuation and realisation pools are, however,
conditional upon the aggregate net asset value attributable to the Company’s
continuing Ordinary shares being at least £30 million (the “£30m NAV
Threshold”). If the £30m NAV Threshold is not met, no elected shares will
convert into Realisation Shares and the Company’s portfolio will not be
split into two pools. Instead, the Company’s investment objective and policy
going forward will be to realise the Company’s assets on a timely basis with
the aim of making progressive returns of cash to shareholders as soon as
practicable.
There are currently no Realisation Shares in issue. The last Realisation
Opportunity was offered in 2021, when only 0.55% of issued share capital, or
149,729 shares, were realised and bought back by the Company.
Shareholders who wish to participate in the 2024 Realisation Opportunity
should refer to the Articles and the 2024 Realisation Opportunity Document
which is available on the Company's website: www.migoplc.co.uk. The election
period to participate in the 2024 Realisation Opportunity commences on 27
August 2024 and ends at 1.00 p.m. on 3 September 2024. The price for each
Ordinary share which is validly elected to participate in the 2024 Realisation
Opportunity will represent a 2 per cent. discount to the net asset value per
Ordinary share as at 2 September 2024 (the “Realisation Price”). The
Realisation Price will be announced through a Regulatory Information Service
on 4 September 2024.
Shareholders who wish to retain their current investment in the Company (and
therefore do not wish to participate in the 2024 Realisation Opportunity in
respect of all or part of their holding of Ordinary shares) do not need to
take any action. Such Shareholders will be deemed to have chosen to continue
their investment in the Company and, where certain Ordinary shares are
redesignated into Realisation Shares, will participate in the continuation
pool in respect of their entire holding of continuing Ordinary shares.
Share Issues and Buybacks
The Directors have the authority to issue shares up to an aggregate nominal
amount equal to one-third of the issued share capital of the Company. They
also have authority to issue shares, or sell Treasury shares, up to an
aggregate nominal amount equal to 10% of the issued share capital for cash,
without pre-emption rights applying. At the last Annual General Meeting held
on 20 September 2023, the Directors were also granted the authority to
repurchase up to 14.99% of the Company’s issued share capital. These
authorities will expire at the Annual General Meeting to be held on 18
September 2024, when resolutions to renew them will be proposed.
The Company makes use of share buybacks and share issuances with the objective
of achieving a sustainable low discount (or premium) to net asset value per
share. Shares are not bought back – either for holding in Treasury or for
cancellation – unless the result is an increase in the net asset value per
Ordinary share. Shares will only be re-sold from Treasury or issued as new
shares at a premium to the net asset value per Ordinary share.
At 30 April 2024, the number of Ordinary shares in issue was 22,537,797. No
shares have been issued during the year, and none were issued after the
year-end. During the year, 1,760,000 shares were repurchased for cancellation,
and 75,000 after the year-end and up to the date of this report.
Treasury Shares
The Company may make market purchases of its own shares for cancellation or
for holding in Treasury where it is considered by the Board to be cost
effective and positive for the management of the Company’s capital base to
do so. During the year, and since the year end, no shares were purchased for,
or held in, Treasury. All shares bought back during the financial year and
since the year end were cancelled.
Global Greenhouse Gas Emissions for the Year ended 30 April 2024
The Company is an investment trust, with neither employees nor premises, nor
has it any financial or operational control of the assets which it owns. It
has no greenhouse gas emissions to report from its operations nor does it have
responsibility for any other emissions – producing sources as defined in the
Companies Act 2006 (Strategic Report and Directors’ Report) Regulations
2013, including those within the Company’s underlying investment portfolio.
Consequently, the Company consumed less than 40,000 kWh of energy during the
year in respect of which the Directors’ Report is prepared and therefore is
exempt from the disclosures required under the Streamlined Energy and Carbon
Reporting criteria.
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to include certain information, more
applicable to traditional trading companies, in a single identifiable section
of the Annual Report or a cross reference table indicating where the
information is set out. The Directors confirm that there are no disclosures to
be made in this regard.
Modern Slavery Act 2015
The Company does not provide goods or services in the normal course of
business, and as a financial investment vehicle, does not have customers.
Therefore, the Directors do not consider that the Company is required to make
a statement under the Modern Slavery Act 2015 in relation to slavery or human
trafficking. The Company’s suppliers are typically professional advisers and
the Company’s supply chains are considered to be low risk in this regard.
Anti-Bribery and Corruption Policy
The Board has adopted a zero tolerance approach to instances of bribery and
corruption. Accordingly, it expressly prohibits any Director or associated
persons when acting on behalf of the Company, from accepting, soliciting,
paying, offering or promising to pay or authorise any payment, public or
private, in the United Kingdom or abroad to secure any improper benefit for
themselves or for the Company.
The Board applies the same standards to its service providers in their
activities for the Company.
A copy of the Company’s Anti-Bribery and Corruption Policy can be found on
its website at www.migoplc.co.uk. This policy is reviewed annually by the
Audit Committee.
Prevention of the Facilitation of Tax Evasion
In response to the implementation of the Criminal Finances Act 2017, the Board
adopted a zero-tolerance approach to the criminal facilitation of tax evasion.
A copy of the Company’s policy on preventing the facilitation of tax evasion
can be found on the Company’s website at www.migoplc.co.uk. The policy is
reviewed annually by the Audit Committee.
Political Donations
The Company has not made and does not intend to make any political donations.
Corporate Governance
The Corporate Governance report, which includes the Company’s corporate
governance policies is set out below.
Common Reporting Standard (“CRS”)
CRS is a global standard for the automatic exchange of information
commissioned by the Organisation for Economic Cooperation and Development and
incorporated into UK law by the International Tax Compliance Regulations 2015.
CRS requires the Company to provide certain additional details to HMRC in
relation to certain shareholders. The reporting obligation began in 2016 and
is an annual requirement. The Company’s Registrar, Computershare Investor
Services PLC, have been engaged to collate such information and file the
reports with HMRC on behalf of the Company.
Articles of Association
Any amendment of the Company’s Articles of Association requires a special
resolution to be passed by shareholders.
Annual General Meeting
The full Notice of the Annual General Meeting together with explanatory notes
is set out at the back of this document. In addition to the ordinary business
of the meeting, the following resolutions will be proposed as special
business:
Resolution 10: Authority to allot shares up to approximately one-third of the
ordinary shares in issue;
Resolution 11: Authority to issue new shares or sell shares from Treasury for
cash, up to approximately 10% of the Company’s issued ordinary shares, at a
price per share not less than the net asset value per share, and to disapply
pre-emption rights in respect of those shares;
Resolution 12: Authority to buy back up to 14.99% of shares in issue at the
time of the AGM, either for cancellation or for placing into Treasury; and
Resolution 13: Authority to hold general meetings (other than AGMs) on at
least 14 days’ notice.
Resolution 14: Authority to buy back up to 30,000,000 Elected Shares in case
they cannot be placed in the market by the Company's corporate broker
following the 2024 Realisation Opportunity.
Resolution 15: Authority to buy back up to 30,000,000 Realisation Shares which
have not been placed in the market nor bought back by the Company.
Resolution 10 will be put to shareholders as an ordinary resolution and
Resolutions 11 to 15 will be proposed as special resolutions.
Ordinary resolutions require that more than 50% of the votes cast at the
relevant meeting must be in favour of the resolutions for them to be passed.
Special resolutions require that at least 75% of the votes cast must be in
favour of the resolutions for them to be passed.
Recommendation
The Directors consider that all the resolutions to be proposed at the AGM are
in the best interests of the Company and its members as a whole. The Directors
unanimously recommend that shareholders vote in favour of all the resolutions,
as they intend to do in respect of their own beneficial holdings.
AGM Arrangements
The AGM will be held on Wednesday, 18 September 2024 at 12.00 noon, and the
Board is looking forward to meeting investors.
Shareholders are encouraged to view the Company’s website, www.migoplc.co.uk
for further information nearer the time. Questions can be submitted to the
Company Secretary at info@frostrow.com.
Shareholders are also strongly encouraged to exercise their votes in respect
of the meeting in advance. Voting by proxy will ensure that all
shareholders’ votes are registered in the event that attendance at the AGM
is not possible or restricted or if the meeting is postponed. Further details
about the voting process can be found in the Notice of Meeting at the end of
this document. The results of the AGM will be made public via a regulatory
announcement and posted on the Company’s website at www.migoplc.co.uk after
the meeting.
Audit Information
The Directors who held office at the date of this report confirm that, so far
as they are aware, there is no relevant audit information of which the
Company’s Auditors are unaware and each Director has taken all the steps
that he/she ought to have taken as a Director to make himself/herself aware of
any relevant audit information and to establish that the Company’s Auditors
are aware of that information.
On behalf of the Board
Richard Davidson
Chairman
24 July 2024
Corporate Governance Report
The Board and its Committees
Responsibility for effective governance lies with the Board whose role is to
promote the long-term success of the Company. The Governance framework of the
Company reflects the fact that as an externally-managed investment company it
has no employees and currently outsources portfolio management to Asset Value
Investors Limited and company management, company secretarial, administrative
and marketing services to Frostrow Capital LLP. The Board generates value for
shareholders through its appointment and oversight of the service providers
and management of costs associated with running the Company.
The Board
Chairman – Richard Davidson
Three additional non-executive Directors, all considered independent. (Please
see above). Senior Independent Director - Caroline Gulliver.
Key responsibilities:
* to provide leadership and set strategy, values and standards within a
framework of prudent effective controls which enable risk to be assessed and
managed;
* to ensure that a robust corporate governance framework is implemented; and
* to challenge constructively and scrutinise performance of all outsourced
activities.
Audit Committee
Chairman: Caroline Gulliver
All independent Directors
(The Chairman of the Board is also a member of the Committee)
Key responsibilities:
* to monitor the integrity of the Company’s Annual Report and financial
statements and of the half-yearly report;
* to oversee the risk and control environment; and
* to have primary responsibility for the relationship with the Company’s
external auditors, to review their independence and performance, and to
determine their remuneration.
Meetings are held at least twice yearly and are arranged to coincide with the
publication of the Company’s financial statements.
The Audit Committee Report is set out below.
Management Engagement Committee
Chairman: Richard Davidson
All independent Directors
Key responsibilities:
* to review the performance and remuneration of the AIFM and the Investment
Manager’s obligations under the IMA and Delegation Agreement and to consider
any variation to the terms of these agreements; and
* to review regularly the contracts, the performance and remuneration of the
Company’s other principal service providers.
Meetings are held at least once a year.
The work of the Management Engagement Committee is set out below.
Copies of the full terms of reference, which clearly define the
responsibilities of each committee, can be obtained from the Company Secretary
and can be found on the Company’s website at www.migoplc.co.uk. They will
also be available for inspection at the Annual General Meeting.
The Directors have decided that, given the size of the Board, it is not
necessary to form separate remuneration and nomination committees. The duties
that would normally fall to those committees are carried out by the Board as
a whole.
Corporate Governance Statement
The Company is committed to the highest standards of corporate governance and
the Board is accountable to shareholders for the governance of the Company’s
affairs.
The Board of MIGO Opportunities Trust plc has considered the principles and
recommendations of the AIC Code of Corporate Governance published in February
2019 (the “AIC Code”). The AIC Code addresses all the principles set out
in the 2018 UK Corporate Governance Code (the “UK Code”), as well as
setting out additional provisions on issues that are of specific relevance to
the Company.
The Board considers that reporting against the principles and provisions of
the AIC Code (which has been endorsed by the Financial Reporting Council) will
provide better information to shareholders. By reporting against the AIC Code,
the Company meets its obligations under the UK Code (and associated disclosure
requirements under paragraph 9.8.6 of the Listing Rules) and as such does not
need to report further on issues contained in the UK Code which are irrelevant
to the Company as an externally-managed investment company, including the
provisions relating to the role of the chief executive, executive directors’
remuneration and the internal audit function.
The AIC Code is available on the AIC’s website www.theaic.co.uk and the UK
Code can be viewed on the Financial Reporting Council website www.frc.org.uk.
The AIC Code includes an explanation of how the AIC Code adapts the principles
and provisions set out in the UK Code to make them relevant for investment
companies.
The Company has no Remuneration Committee, but otherwise has complied with the
principles and provisions of the AIC Code.
The Chairman of the Board is also a member of the Audit Committee, but this is
considered acceptable due to the small number of Directors. However, under the
terms of reference of the Audit Committee, the Chairman of the Board may not
act as the Chairman of the Audit Committee.
The Corporate Governance Statement forms part of the Directors’ Report.
In addition to the above, the Board also notes the publication of the new UK
Corporate Governance Code 2024 (the “new UK Code”) which will apply to
financial years beginning on or after 1 January 2025. The AIC will, in due
course, provide a new AIC Code of Corporate Governance (“new AIC Code”)
which is expected to address all the principles set out in the new UK Code.
The Company will report against the new AIC Code once it is available.
The Board
The Board is responsible for the effective governance and the overall
management of the Company’s affairs. The governance framework of the Company
reflects the fact that as an investment company it outsources investment
management services to Asset Value Investors Limited as AIFM and company
secretarial, administration and marketing services to Frostrow Capital LLP.
The Board’s key responsibilities are to set the strategy, values and
standards; to provide leadership within a controls framework which enable
risks to be assessed and managed; to challenge constructively and scrutinise
performance of all outsourced activities; and to review regularly the
contracts, performance and remuneration of the Company’s principal service
providers and Investment Manager. The Board is responsible for all matters of
direction and control of the Company, including its investment policy, and no
one individual has unfettered powers of decision.
The Board consists of four non-executive Directors, who have substantial
recent and relevant experience of investment trusts and financial and public
company management. The Directors possess a wide range of business and
financial expertise relevant to the Company and consider that they commit
sufficient time to the Company’s affairs. Brief biographical details of the
Directors, including details of their significant commitments, can be found
above.
Other than their letters of appointment as Directors, none of the Directors
has a contract of service with the Company nor has there been any other
contract or arrangement between the Company and any Director at any time
during the year. Directors are not entitled to any compensation for loss of
office.
The role of the Board is to promote the long-term sustainable success of the
Company, generating value for shareholders and contributing to wider society.
Board Leadership and Purpose
Purpose and Strategy
The Board assesses the basis on which the Company generates and preserves
value over the long term. The Strategic Report describes how opportunities and
risks to the future success of the business have been considered and
addressed, the sustainability of the Company’s business model and how its
governance contributes to the delivery of its strategy.
The Company’s Objective and Investment Policy are set out in the Business
Review.
Strategy issues and all material operational matters are considered at Board
meetings.
Board Culture
The Board aims to enlist differences of opinion, unique vantage points and
areas of expertise. The Chairman encourages open debate to foster a supportive
and co-operative approach for all participants. Strategic decisions are
discussed openly and constructively.
The Board aims to be open and transparent with shareholders and other
stakeholders, and for the Company to conduct itself responsibly, ethically and
fairly in its relationships with service providers.
Diversity Policy
The Board supports the principle of boardroom diversity. The Company’s
policy is that the Board and its committees should be comprised of directors
who collectively display the necessary balance of professional skills,
experience, length of service and industry knowledge and that appointments to
the Board and its committees should be made on merit, against objective
criteria, including diversity in its broadest sense.
The objective of the policy is to have a broad range of approaches,
backgrounds, skills, knowledge and experience represented on the Board. The
Directors believe that this will make the Board and its committees more
effective at promoting the long-term sustainable success of the Company and
generating value for shareholders by ensuring there is a breadth of
perspective among the Directors and the challenge needed to support good
decision making. To this end, achieving a diversity of perspectives and
backgrounds on the Board and its committees will be a key consideration in any
director search process.
The Board is aware that gender representation objectives have been set for
FTSE 350 companies and that targets concerning ethnic diversity have been
recommended for each FTSE 100 board to have at least one director of colour by
2021 and for each FTSE 250 board to have the same by 2024.
When appointing new Board members, the Directors will consider gender and
ethnic diversity besides knowledge, skills and experience. However, the Board
does not feel that it would be appropriate to set targets as all appointments
are made on merit.
Board Diversity
The Board is supportive of the FCA’s recently updated Listing Rules (LR
9.8.6R(9)) to encourage greater diversity on listed company boards to the
effect that:
(i) at least 40% of the individuals on its board are women;
(ii) at least one of the senior board positions is held by a woman; and
(iii) at least one individual on the board is from a minority ethnic
background.
The FCA’s disclosure requirements will serve as guidelines when appointing
new Directors.
The Company has chosen to align its diversity reporting reference date with
the Company’s financial year end and proposes to maintain this alignment for
future reporting periods. The Company has met two of the three targets on
board diversity as at its chosen reference date, 30 April 2024: 40% of
individuals on the Board are women and a senior position, that of Chairman of
the Audit Committee, is held by a woman.
The relatively small size of the Company’s Board, and therefore more
infrequent vacancies and opportunities for recruitment make achieving
diversity on the Board a more challenging, but ongoing, process. As succession
planning of the Board progresses over future years, the Company will continue
to strive for increased diversity on its Board through its Diversity Policy.
Further details on the Company’s appointment process can be found under
Appointments to the Board below.
As required under LR9.8.6R(10), further details in respect of the three
targets outlined above as at 30 April 2024 is disclosed as follows. Each
Director volunteered how they wished to be included in the tables.
(a) Table for reporting on gender identity or sex
Number
of senior
No. of Board positions on
As at 30 April 2024 members Percentage the Board*
Men 3 60% 1 (Chair of the Board)
Women 2 40% 1 (Audit Chair and SID*)
Not specified / prefer not to say – – –
* SID = Senior Independent Director
(b) Table for reporting on ethnic background
Number
of senior
No. of Board positions on
As at 30 April 2024 members Percentage the Board*
White British or other White 5 100% 2
(including minority-white groups)
Mixed/Multiple ethnic groups – – –
Asian/Asian British – – –
Black/African/Caribbean/Black British – – –
Other ethnic group, including Arab – – –
Not specified/prefer not to say – – –
* As an externally managed investment company, the Company has no executive
directors, employees or internal operations. The Board has therefore excluded
the columns relating to executive management from the tables above. In
addition, the senior positions on the Company’s Board of the chief executive
and the chief financial officer are not applicable to the Company. In the
absence of the aforementioned roles, the Board considers the Chair of the
Audit Committee also to be a senior position on the Board. Caroline Gulliver
serves as the Chair of the Audit Committee.
Since the end of the Company’s financial year and as at the date of this
annual report, the percentages of men and women on the Board are 50% each,
with a total of two male and two female “White British or other White
(including minority-white groups)” Directors serving.
Directors’ Independence
In accordance with the AIC Code, as part of the evaluation process, the Board
has reviewed the independence of each individual Director and the Board as a
whole.
The AIC Code requires that this report should identify each non-executive
Director the Board considers to be independent in character and judgement and
whether there are relationships or circumstances which are likely to affect,
or could appear to affect, a Director’s judgement, stating its reasons if it
determines that a Director is independent notwithstanding the existence of
relationships or circumstances which may appear to be relevant to its
determination.
Following formal performance evaluation, and having noted the willingness of
each Director to challenge and debate the activities of the AIFM and
Investment Manager, the Board has concluded that each Director is independent
in character and judgement. Furthermore, the Board is content that there are
no relationships or circumstances which are likely to affect the judgement of
any Director.
Policy on Tenure
The Board subscribes to the view that long-serving directors should not be
prevented from forming part of an independent majority. It does not consider
that a director’s tenure necessarily reduces their ability to act
independently and, following appropriate, formal performance evaluations,
believes that directors may be considered independent in character and
judgement. The Board’s policy on tenure is that continuity and experience
are considered to add significantly to the strength of the Board and, as such,
no limit has been imposed on the overall length of service of any of the
Company’s Directors, including the Chairman. In view of its non-executive
nature, the Board considers that it is not appropriate for directors to be
appointed for a specified term, although new directors will be appointed with
the expectation that they will serve for a minimum period of three years
subject to shareholder approval. The Board has adopted a policy whereby all
Directors will be required to stand for re-election annually, regardless of
their length of tenure.
Board Evaluation
An evaluation of the Board and its Committees as well as the Chairman and the
individual Directors is carried out annually. In addition to evaluations
carried out by the Board collectively, the Management Engagement Committee on
behalf of the Board considers annually whether an external evaluation should
be undertaken by an independent agency.
The Chairman acts on the results of the Board’s evaluation by recognising
the strengths and addressing the weaknesses of the Board and recommending any
areas for development. If appropriate, the Chairman will propose that new
members are appointed to the Board or will seek the resignation of
Board Directors.
During the year ended 30 April 2024, the performance of the Board, its
committees and individual Directors (including each Director’s independence)
was again evaluated through a formal assessment process led by the Chairman.
This involved the circulation of a Board and Committee evaluation checklist,
tailored to suit the nature of the Company, followed by discussions between
the Chairman and each of the Directors. The performance of the Chairman was
evaluated by the other Directors under the leadership of the Senior
Independent Director.
As part of the Board evaluation discussions, each of the Directors also
assessed the overall time commitment of their external appointments and it was
concluded that all Directors have sufficient time to discharge their duties.
All Directors have attended all scheduled Board and Committee meetings and
have made themselves available for ad hoc discussions where necessary.
In particular, Caroline Gulliver as a new Director on the Board of MIGO has
already shown her expertise in reviewing the Company’s risk register and
dealing with this year’s audit.
The Chairman is satisfied that the structure and operation of the Board
continues to be effective and relevant and that there is a satisfactory mix of
skills, experience and knowledge of the Company. The Board has considered the
position of all the Directors including the Chairman as part of the evaluation
process and believes that it would be in the Company’s best interests to
recommend them for re-election and election as appropriate at the forthcoming
AGM.
Board Composition and Succession
The Board has approved a composition and succession plan to ensure that the
Board members collectively (i) display the necessary balance of professional
skills, experience, length of service and industry/Company knowledge; and (ii)
are fit and proper to direct the Company’s business with prudence and
integrity. This plan is reviewed annually and at such other times as
circumstances may require.
To this end, the Board collectively reviews all appointments to the Board and
its Committees and, if necessary, following a skills review of the current
Directors, will seek to add persons with complementary skills or who possess
skills and experience which might fill any gaps in the Board’s knowledge or
experience and who can devote sufficient time to the Company to carry out
their duties effectively.
The Board will ensure that a robust recruitment process is undertaken for all
directors’ appointments to deliver fair and effective selection outcomes.
Independent advisers will be appointed to aid directors’ recruitment and to
help to mitigate the risk of self-selection from a narrow pool of candidates.
The Board will ensure that any search agency used has no connection with the
Company or any of the Board members and that the appropriate disclosure is
made in the next annual report.
Achieving a diversity and balance of skills and knowledge in the Board will be
a key determinant of any new appointments. Selecting the best candidate,
irrespective of background, is paramount. This will benefit the effectiveness
of the Board by creating a breadth of perspective among directors.
Where the Board appoints a new Director during the year or after the year-end
and before the notice of Annual General Meeting has been published, that
Director will stand for election by shareholders at the next Annual General
Meeting.
Appointment to the Board
During the year, Caroline Gulliver was appointed to the Board with effect from
the close of business on 29 December 2023.
Her appointment followed in the wake of the appointment of AVI as new AIFM and
Investment Manager which meant that Katya Thomson was no longer perceived as
independent due to being on the board of another AVI investment trust.
Stephenson Executive Search, a small bespoke consultancy, was chosen to find a
new Chairman of the Audit Committee and found potential candidates, held
initial interviews and made recommendations to the Board.
Following final interviews, the Board decided that Caroline Gulliver was an
exceptional candidate and had a lot to offer to MIGO so that her appointment
as non-executive Director and Chairman of the Audit Committee would be in
shareholders’ interests. Caroline will stand for election by shareholders at
the forthcoming AGM.
Induction/Development
A procedure for the induction of new Directors has been established, including
the provision of an induction pack containing relevant information about the
Company, its processes and procedures. New appointees have the opportunity of
meeting with the Chairman and relevant persons at the AIFM, Investment Manager
and Company Secretary.
Directors are also given key information on the Company’s regulatory and
statutory requirements as they arise including information on the role of the
Board, matters reserved for its decision, the terms of reference for the Board
committees, the Company’s corporate governance practices and procedures and
the latest financial information. Directors are encouraged to participate in
training courses where appropriate.
Chairman and Senior Independent Director
The current Chairman, Mr Davidson, is deemed by his fellow independent Board
members to be independent and to have no conflicting relationships. He is
chair of the University of Edinburgh’s Investment Committee as well as the
chairman of Aberforth Smaller Companies Trust plc and of Foresight Sustainable
Forestry Company PLC. The Board considers that he has sufficient time to
commit to the Company’s affairs as necessary.
Caroline Gulliver was appointed as the Senior Independent Director (“SID”)
on 13 March 2024. Her biography and other appointments are detailed above and
the Board considers that she has sufficient time to commit to the Company’s
affairs as necessary.
Responsibilities of the Chairman
The Chairman’s primary role is to provide leadership to the Board, assuming
responsibility for its overall effectiveness in directing the Company. The
Chairman is responsible for:
· taking the chair at general meetings and Board meetings, conducting
meetings effectively and ensuring that all Directors are involved in
discussions and decision making;
· setting the agenda for Board meetings and ensuring the Directors receive
accurate, timely and clear information for decision-making;
· taking a leading role in determining the Board’s composition and
structure;
· overseeing the induction of new directors and the development of the Board
as a whole;
· leading the annual board evaluation process and assessing the contribution
of individual directors;
· supporting and also challenging the Investment Manager (and other
suppliers where necessary);
· ensuring effective communications with shareholders and, where
appropriate, other stakeholders; and
· engaging with shareholders to ensure that the Board has a clear
understanding of shareholders’ views.
Responsibilities of the SID
The SID serves as a sounding board for the Chairman and acts as an
intermediary for other Directors and shareholders. The SID is responsible for:
· working closely with the Chairman and providing support;
· leading the annual assessment of the performance of the Chairman;
· holding meetings with the other non-executive Directors without the
Chairman being present, on such occasions as necessary;
· carrying out succession planning for the Chairman’s role;
· working with the Chairman, other Directors and shareholders to resolve
major issues; and
· being available to shareholders and other Directors to address any
concerns or issues they feel have not been adequately dealt with through the
usual channels of communication (i.e. through the Chairman or the Investment
Manager).
Directors’ Other Commitments
During the year, save for the details set out above, none of the Directors
took on any significant new commitments or appointments. All of the Directors
consider that they have sufficient time to discharge their duties.
Conflicts of Interest
Company Directors have a statutory obligation to avoid a situation in which
they (and connected persons) have, or can have, a direct or indirect interest
that conflicts, or may possibly conflict, with the interests of the Company.
In line with the Companies Act 2006, the Board has the power to authorise any
potential conflicts of interest that may arise and impose such limits or
conditions as it thinks fit. A register of interests and potential conflicts
is maintained and is reviewed at every Board meeting to ensure all details are
kept up to date. It was resolved at each Board meeting during the year that
there were no direct or indirect interests of a Director that conflicted with
the interests of the Company, with the exception of the continued appointment
of Kepler Partners LLP (“Kepler”) as a service provider to the Company
when Mr van Cutsem, a founding partner of Kepler, abstained from the
decision made by the Board. More information about Kepler as a related party
can be found in note 17 to the Financial Statements. Appropriate authorisation
will be sought if any new conflicts or potential conflicts arise.
Board Meetings
The Board meets formally at least four times each year. Representatives of the
Investment Manager attend all meetings at which investment matters are
discussed; representatives from Frostrow are in attendance at each Board
meeting. The Chairman encourages open debate to foster a supportive and
co-operative approach for all participants. The primary focus at regular Board
meetings is the review of investment performance and associated matters,
including asset allocation, together with marketing and investor relations,
peer group information and industry issues. The Board reviews key investment
and financial data, revenue and expenses projections, analyses of asset
allocation, transactions, gearing policy, cash management, customised
performance metrics and performance comparisons, share price and net asset
value performance. The Board’s approach to addressing the Investment
Manager’s performance and the Company’s share price performance during the
year is described in the stakeholders section in the Business Review.
The Board is responsible for setting the Company’s corporate strategy and
reviews the continued appropriateness of the Company’s investment objective,
investment strategy and investment restrictions at each meeting.
Meeting Attendance
The Directors meet at regular Board meetings, held at least once a quarter,
with additional meetings arranged as necessary. During the year to 30 April
2024, the scheduled meetings held and attended by each Director was as below.
There were also a considerable number of ad hoc Board and Committee meetings
to consider matters such as the approval of regulatory announcements, the
appointment of a new Director, the appointment of a new AIFM and Investment
Manager to the Company as well as the appointment of a new Depository and
Custodian and the renewal of MIGO’s loan facility. With the exception of
certain ad hoc meetings which could not be attended by one Director due to
their being away on business, all other meetings were attended by all Board
members.
Management
Audit Engagement
Board Committee Committee
meetings meetings meetings
(4) (3) (1)
Richard Davidson 4 3 1
Caroline Gulliver (appointed on 29 December 2023) 1 1 n/a
Lucy Costa Duarte 4 3 1
Ian Henderson 4 3 1
Katya Thomson (resigned on 29 December 2023) 3 2 1
Hugh van Cutsem (resigned on 10 July 2024) 4 3 1
Matters Reserved for Decision by the Board
The Board has adopted a schedule of matters reserved for its decision. This
includes, inter alia, the following:
· Decisions relating to the strategic objectives and overall management of
the Company, including the appointment or removal of the Investment Manager
and other service providers, establishing the investment objectives, strategy
and performance comparators, the permitted types or categories of investments
and the proportion of assets that may be invested in them.
· Requirements under the Companies Act 2006, including approval of the
half-year and annual financial statements, recommendation of the final
dividend (if any), the appointment or removal of the Company Secretary, and
determining the policy on share issuance and buybacks.
· Matters relating to certain Stock Exchange requirements and announcements,
the Company’s internal controls, and the Company’s corporate governance
structure, policies and procedures.
· Matters relating to the Board and its Committees, including the terms of
reference and membership of the committees, and the appointment of directors
(including the Chairman and the SID if applicable).
Day-to-day investment management is delegated to Asset Value Investors
Limited. Operational management is delegated to Frostrow.
The Board takes responsibility for the content of communications regarding
major corporate issues although the Investment Manager or Frostrow may act as
spokesman. The Board is kept informed of relevant promotional material that is
issued by the Investment Manager.
Internal Controls Structure
An overview of the Internal Controls structure of the Company and its service
providers is shown in the full annual report.
[Graph in the annual report].
Risk Management and Internal Controls
The Board has overall responsibility for the Company’s risk management and
internal control systems and for reviewing their effectiveness. The Company
applies the guidance published by the Financial Reporting Council on internal
controls. Internal control systems are designed to manage, rather than
eliminate, the risk of failure to achieve the business objective and can
provide only reasonable and not absolute assurance against material
misstatement or loss. These controls aim to ensure that the assets of the
Company are safeguarded, that proper accounting records are maintained and
that the Company’s financial information is reliable. The Directors have a
robust process for identifying, evaluating and managing the significant risks
faced by the Company, which are recorded in a risk matrix. The Audit
Committee, on behalf of the Board, considers each risk as well as reviewing
the mitigating controls in place. Each risk is rated for its “likelihood”
and “impact” and the resultant numerical rating determines its ranking
into “Principal/Key”, “Significant” or “Minor”. This process was
in operation during the year and continues in place up to the date of this
report. The process also involves the Audit Committee receiving and examining
regular reports from the Company’s principal service providers. The Board
then receives a detailed report from the Audit Committee on its findings. The
Directors have not identified any significant failures or weaknesses in
respect of the Company’s internal control systems.
Information on the Company’s financial, strategic and operational risk
management can be found in the Strategic Report.
Relationship with the Investment Manager
At each Board meeting, representatives from the AIFM and Investment Manager
are in attendance to present verbal and written reports covering their
activity, portfolio and investment performance over the preceding period, and
compliance with the applicable rules and guidance of the FCA and the UK
Stewardship Code. The Investment Managers also seek approval for specific
transactions which they are required to refer to the Board.
Ongoing communication with the Board is maintained between formal meetings.
The Board and the Investment Manager operate in a supportive, co-operative and
open environment.
The Management Engagement Committee evaluates the AIFM’s and Investment
Manager’s performance and reviews the terms of the Investment Management
Agreement at least annually.
Relationship with Other Service Providers
Representatives from Frostrow are in attendance at each Board meeting to
address questions on the Company’s operations, administration and governance
requirements.
The Management Engagement Committee monitors and evaluates all of the
Company’s other service providers, including Frostrow, and also the
Custodian, the Registrar and the Broker. At the most recent review, in July
2024, the Committee concluded that all the service providers were performing
well.
Relations with Shareholders
A detailed analysis of the substantial shareholders in the Company is provided
to the Directors at each Board meeting. Representatives of the Investment
Manager and Frostrow Capital LLP regularly meet with institutional
shareholders and private client asset managers to discuss strategy and to
understand their issues and concerns and, if applicable, to discuss corporate
governance issues. The results of such meetings are reported at the following
Board meeting.
Regular reports from the Company’s corporate stockbroker are submitted to
the Board on investor sentiment, industry issues and trends.
The Company aims to provide shareholders with a full understanding of the
Company’s investment objective, policy and activities, its performance and
the principal investment risks by means of informative annual and half-yearly
reports. This is supplemented by the daily publication of the net asset value
of the Company’s shares through the London Stock Exchange. The Company’s
website, www.migoplc.co.uk is regularly updated and provides useful
information about the Company, including the Company’s financial reports,
monthly factsheets, Manager’s commentaries, podcasts and announcements. The
Company also held a number of webinars for investors.
Shareholders wishing to communicate with the Chairman, or any other member of
the Board, may do so by writing to the Company, for the attention of the
Company Secretary at the offices of Frostrow Capital LLP or by email at
info@frostrow.com. All shareholders are encouraged to attend the Annual
General Meeting, where they are given the opportunity to question the
Chairman, the Board and the Investment Managers. The Directors welcome the
views of all shareholders and place considerable importance on communications
with them.
The Annual and Half-yearly Reports of the Company are prepared by the Board
and its advisers to present a full and readily understandable review of the
Company’s performance. Copies of the Annual Report are dispatched to
shareholders by mail, where this form of communication is chosen. It is also
possible to download the Annual Report and other documents from the
Company’s website at www.migoplc.co.uk.
Socially Responsible Investment
The Company’s investment activities and day to day management is delegated
to the Investment Manager and other third parties. As an investment trust, the
Company has no direct social, community, employee or environmental
responsibilities. Its principal responsibility to shareholders is to ensure
that the investment portfolio is properly managed and invested. As detailed in
the Business Review, the management of the portfolio has been delegated to the
Company’s Investment Manager.
In light of the nature of the Company’s business there are no relevant human
rights issues and the Company does not have a human rights policy.
Stewardship and the Exercise of Voting Powers
As an externally managed investment company, the Board delegates the majority
of its Stewardship and engagement responsibilities to the Company’s
Investment Manager. However, the Board retains oversight of this process by
receiving regular updates from the Investment Manager on its engagement
activities and by reviewing the Investment Manager’s engagement and voting
policies.
Nominee Share Code
Where the Company’s shares are held via a nominee company name, the Company
undertakes:
· to provide the nominee company with multiple copies of shareholder
communications, so long as an indication of quantities has been provided in
advance; and
· to allow investors holding shares through a nominee company to attend
general meetings, provided the correct authority from the nominee company is
available.
Nominee companies are encouraged to provide the necessary authority to
underlying shareholders to attend the Company’s general meetings.
Significant Holdings and Voting Rights
Details of the shareholders with substantial interests in the Company’s
shares, the Directors’ authorities to issue and repurchase the Company’s
shares, and the voting rights of the shares are set out in the Directors'
Report.
Independent Professional Advice
The Board has formalised arrangements under which the Directors, in the
furtherance of their duties, may seek independent professional advice at the
Company’s expense.
During the year, the search for a new non-executive Director and Chairman of
the Audit Committee was undertaken by Stephenson Executive Search, and legal
advice was provided by Stephenson Harwood LLP in respect of drafting
agreements appointing a new AIFM and Investment Manager, Depositary and
Custodian, renewing MIGO’s loan agreement as well as a number of Stock
Exchange announcements.
Independent professional advice and support was also sought from Deutsche
Numis, the Company’s corporate broker, during the search for a new
investment manager for MIGO. Kaso Legg Communications Limited facilitated
communication with shareholders and the market in general.
Company Secretary
The Board has direct access to the advice and services of the Company
Secretary, Frostrow, which is responsible for ensuring that the Board and
Committee procedures are followed and that the Company complies with
applicable regulations. The Company Secretary is also responsible to the Board
for ensuring timely delivery of information and reports and that statutory
obligations of the Company are met.
Audit, Risk and Internal Control
The Statement of Directors’ Responsibilities describes the Directors’
responsibility for preparing this Annual Report.
The Audit Committee Report explains the work undertaken to allow the Directors
to make this statement and to apply the going concern basis of accounting. It
also sets out the main roles and responsibilities and the work of the Audit
Committee throughout the year, and describes the Directors’ review of the
Company’s risk management and internal control systems.
A description of the principal risks facing the Company and an explanation of
how they are being managed is provided in the Strategic Report.
The Board’s assessment of the Company’s longer-term viability is set out
in the Business Review.
Remuneration
The Directors’ Remuneration Report sets out the levels of remuneration for
each Director and explains how Directors’ remuneration is determined.
By order of the Board
Frostrow Capital LLP
Company Secretary
24 July 2024
Audit Committee Report
I am pleased to present the Audit Committee (the “Committee”) Report for
the year ended 30 April 2024. The Committee met three times during the year
under review and once following the year end.
Composition
Due to the small size of the Board, the Audit Committee comprises all the
Directors, whose biographies are set out above, including the Chairman of the
Board. In accordance with the terms of reference of the Committee and the AIC
Code, the Chairman of the Board may be a member provided he or she was
independent on his/ her appointment as chairman, but may not act as the
Committee Chairman. All Directors are non-executive and were considered
independent during the year, as discussed in the Report of the Directors. The
Committee considers that at least one member has recent and relevant
experience in accounting or auditing and that the Committee as a whole has
experience relevant to the investment trust industry.
The Company’s Auditors are invited to attend meetings as necessary.
Representatives of the AIFM and Investment Manager may also be invited. The
Company Secretary acts as the Secretary to the Audit Committee.
Responsibilities of the Committee
The Committee’s responsibilities are set out in formal terms of reference
which are available on the Company’s website www.migoplc.co.uk and which are
reviewed annually. The Committee’s primary responsibilities are:
· to monitor the integrity of the financial statements of the Company,
including its Annual and Half-Yearly Reports and any other formal
announcements of the Company relating to its financial performance, and to
review and report to the Board on significant financial reporting issues and
judgements in those statements having regard to matters communicated to it by
the Auditors;
· to review the effectiveness of the Company’s internal financial controls
and of the internal control and risk management systems of the company and its
third-party service providers;
· to receive and consider reports from the Compliance Officer of the
Investment Manager and AIFM;
· to consider the accounting policies of the Company;
· to monitor adherence to best practice in corporate governance;
· to make recommendations to the Board in relation to the re-appointment of
the Auditors, their terms of engagement and their remuneration;
· to review the scope, results, cost effectiveness, independence and
objectivity of the external Auditors;
· to review the policy on the engagement of the external Auditors to supply
non-audit services and considering relevant guidance regarding the provision
of non-audit services by the external audit firm; and
· to consider the need for an internal audit function.
Matters Considered in the Year
In the year under review, the main duties undertaken were:
· consideration of the appropriateness of the Company’s accounting
policies and of the quality and effectiveness of the accounting records and
management information maintained on behalf of the Company, relying on
meetings with and reports from the AIFM and Investment Manager, Premier Miton
and, with effect from the close of business on 15 December 2023, AVI, and
Frostrow Capital LLP;
· a review of the half-year results and the Annual Report, including the
disclosures made therein in relation to internal controls and risk management,
going concern, related parties and consideration of whether the report is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Company’s position and performance, business
model, strategy and continued operation (including advising the Board on
whether the Company is able to meet its liabilities as they fall due) in order
to make recommendations to the Board. In assessing whether the report is fair,
balanced and understandable, each Director reviewed the disclosures made,
applying their respective knowledge and expertise. The internal controls over
financial reporting were also considered, together with feedback from the
Company’s Auditors, the Investment Manager and the Company Secretary;
· consideration of whether a dividend needed to be paid by the Company in
respect of the previous financial year;
· consideration of the internal controls in place at the Investment Manager,
and the Company’s other principal third-party service providers;
· consideration of the Investment Manager’s policies in relation to
information security and business continuity, meeting with representatives of
its IT and Compliance Departments periodically;
· consideration of the key risks, risk management systems in place and the
Company’s risk matrix;
· consideration of the Company’s Anti-Bribery Policy and the policies and
procedures in place to prevent tax evasion;
· consideration of the nature, scope and cost of the external audit and the
findings therefrom;
· annual consideration of whether there is a need for an internal audit
function;
· consideration of the appointment of the Auditors, the Auditors’
independence, objectivity, effectiveness, provision of any non-audit services
and tenure of appointment;
· consideration of the Investment Manager’s and Frostrow’s whistle
blowing policies for their staff to raise concerns about possible
improprieties, including in relation to the Company, in confidence; and
· consideration of the annual confirmation from the Company’s Depositary
in respect of the safekeeping of the Company’s assets.
Since the year-end, the Committee has also considered the appropriate level of
dividend to be paid by the Company in respect of the year under review, for
recommendation to the Board, as well as the audit findings for the 2024 audit.
Significant Reporting Matters
The significant reporting matters considered by the Committee during the year
were:
Verification of ownership and valuation of the Company’s holdings. The
valuation of investments is undertaken in accordance with the accounting
policies in note 1 to the Financial Statements. Controls are in place to
ensure that valuations are appropriate and existence is verified through
reconciliations with the Custodian. The Committee discussed the controls and
process with Frostrow and the AIFM. Having reviewed the process and controls,
the Committee confirmed it was satisfied that the investments had been valued
correctly and the Company’s ownership was appropriately documented.
The portfolio contains a significant number of holdings where the investee
company is in a process of realisation/liquidation. As at 30 April 2024, 7 out
of 54 holdings (2023: 8 out of 50 holdings) were in a process of realisation,
representing 3.6% (2023: 5%) of the portfolio value. The Investment Manager
provides comprehensive updates on investee companies at each Board meeting and
the Directors have regular discussions with the Investment Manager about the
impact of this ‘tail’ on the Company and its performance.
Recognition of Revenue from Investments
The Committee took steps to gain an understanding of the processes in place to
record investment income and transactions. The Committee sought, and received,
confirmation that all dividends receivable have been accounted for correctly.
Other Reporting Matters
Accounting Policies
The current accounting policies, as set out in note 1 to the Financial
Statments, have been applied consistently throughout the year and the prior
period where applicable.
Going Concern
Having reviewed the Company’s financial position and liabilities, the
Committee is satisfied that it is appropriate for the Board to prepare the
financial statements on the going concern basis. Further detail is provided in
the Business Review.
Viability Statement
The Audit Committee also considered the Company’s financial position and
principal risks in connection with the Board’s statement on the longer-term
viability of the Company, which is set out in the Business Review.
2024 Realisation Opportunity
Furthermore, the Audit Committee considered the possible impact of the 2024
realisation opportunity on the Company’s shorter and longer-term viability.
In view of the good performance of MIGO during the year ended 30 April 2024,
it is hoped that shareholders will hold on to their shares and that the net
asset value of the ordinary shares will continue to be more than £30 million,
allowing the Company to continue in operation.
Financial Statements
The Board has asked the Committee to confirm that in its opinion the Board can
make the statement that the Annual Report taken as a whole is fair, balanced
and understandable and provides the information necessary for shareholders to
assess the Company’s position, performance, business model and strategy. The
Committee has given this confirmation on the basis of its review of the whole
document, underpinned by involvement in the planning for its preparation and
review of the processes to assure the accuracy of factual content.
The Committee is satisfied that it is appropriate for the Board to prepare the
financial statements on the going concern basis. The Financial Statements can
be found below.
Internal Controls and Risk Management
The Board has overall responsibility for the risk assessment and review of the
internal controls of the Company, undertaken in the context of its investment
objective.
The review covers the key business, operational, compliance and financial
risks facing the Company. In arriving at its judgement of what risks the
Company faces, the Board has considered the Company’s operations in light of
the following factors:
· the nature of the Company, with all management functions outsourced to
third-party service providers;
· the nature and extent of risk which it regards as acceptable for the
Company to bear within its overall investment objective;
· the threat of such risks becoming a reality; and
· the Company’s ability to reduce the incidence and impact of risk on its
performance.
Against this background, a risk matrix has been developed which covers key
risks that the Company faces, the likelihood of their occurrence and their
potential impact, how these risks are monitored and the mitigating controls
put in place. The Board has delegated to the Committee the responsibility for
the review and maintenance of the risk matrix. It reviews the risk matrix
twice yearly, bearing in mind any changes to the Company, its environment or
service providers since the last review. The Committee considers whether any
new risks are emerging as a result of any such changes and any significant
changes to the risk matrix are discussed with the Board.
Over the past year, the war in Gaza and elections in a number of countries
including the UK and the US, have emerged as new risk factors, and the
Company’s risk matrix has been amended to take account of such risks on
various aspects of the Company’s operations and investment management. The
Audit Committee keeps all developments under close review, but there were no
fundamental changes to the Company’s risk management processes during the
year, and no significant failings or weaknesses were identified from the
Committee’s most recent risk review.
The Committee acknowledges that the Company is reliant on the systems utilised
by its service providers. The Committee receives internal controls reports
from, and reviews the internal controls in place at, the Investment Manager
and AIFM twice annually. The internal controls reports from its other
principal service providers – from the Company’s Administrator and Company
Secretary; from the Custodian; and from the Registrar - are reviewed on an
annual basis. Following this review, the Committee concluded that there were
no significant control weaknesses or other issues that needed to be brought to
the attention of the Board.
The Committee members confirm that they have carried out a review of the
effectiveness of the system of internal financial control and risk management
during the year, as set out above and that:
(a) an ongoing procedure for identifying, evaluating and managing
significant risks faced by the Company was in place for the year under review
and up to the date of this report. This procedure is regularly reviewed by the
Board; and
(b) they are responsible for the Company’s system of internal controls
and for reviewing its effectiveness and that it is designed to manage the risk
of failure to achieve business objectives. This can only provide reasonable,
but not absolute, assurance against material misstatement or loss.
Internal Audit
The Company does not have an internal audit function as all of its day-to-day
operations are delegated to third parties, all of whom have their own internal
control procedures. The Committee discussed whether it would be appropriate to
establish an internal audit function, and agreed that the existing system of
monitoring and reporting by third parties remains appropriate and sufficient.
External Auditors
The Audit
The nature and scope of the audit for the year under review, together with
PricewaterhouseCoopers LLP‘s (“PwC”) audit plan, were considered by the
Committee on 13 March 2024. The Committee then met PwC on 9 July 2024 to
formally review the outcome of the audit and to discuss the limited issues
that arose. The Committee also discussed the presentation of the Annual Report
with the Auditors and sought their perspective.
Independence and Effectiveness
In order to fulfil the Committee’s responsibility regarding the independence
of the Auditors, the Committee reviewed:
· the senior audit personnel in the audit plan for the year;
· the Auditors’ arrangements concerning any conflicts of interest;
· the extent of any non-audit services; and
· the statement by the Auditors that they remain independent within the
meaning of the regulations and their professional standards.
In order to consider the effectiveness of the Audit process, the Committee
reviewed:
· the Auditors’ fulfilment of the agreed audit plan;
· the report arising from the audit itself; and
· feedback on the Auditors’ performance during the audit from Frostrow and
AVI.
A summary of the Company’s policy on the provision by the Auditors of
non-audit services to the Company can be found below.
The Committee is satisfied with the Auditors’ independence and the
effectiveness of the audit process, together with the degree of diligence and
professional scepticism brought to bear.
The audit fee for the year ended 30 April 2024 was £56,280 (2023: £53,600).
Appointment and Tenure
PwC were appointed in September 2016 to audit the financial statements for the
year ended 30 April 2017 and subsequent financial periods. The period of total
uninterrupted engagement is eight years. Mr Kevin Rollo is the current
Engagement Leader, having been allocated to the Company by PwC for the year
ended 30 April 2021.
In accordance with current legislation, the Company is required to conduct an
audit tender process at least every 10 years and will have to change its
auditor after a maximum of 20 years. In addition, the nominated Engagement
Leader will be required to rotate after serving a maximum of five years with
the Company; it is therefore anticipated that Mr Rollo will serve as
Engagement Leader until completion of the audit process in 2025. The Company
has complied throughout the year ended 30 April 2024 with the provisions of
the Statutory Audit Services Order 2014, issued by the Competition and Markets
Authority.
The re-appointment of PricewaterhouseCoopers LLP as Auditors to the Company
will be submitted for shareholder approval, together with a separate
resolution to authorise the Committee to determine the remuneration of the
Auditors, at the AGM to be held on 18 September 2024.
Non-Audit Services
In accordance with the Company’s non-audit services policy, the Audit
Committee reviews the scope and nature of all proposed non-audit services
before engagement to ensure that auditor independence and objectivity are
safeguarded. The audit policy includes a list of non-audit services which may
be provided by the Auditors as long as there is no apparent threat to
independence, as well as a list of services which are prohibited. Non-audit
services are capped at 70% of the average of the statutory audit fees for the
preceding three years.
No non-audit services were provided by the Auditors during the year ended 30
April 2024 (2023: none).
Effectiveness of the Committee
A formal internal Board review which included reference to the Audit
Committee’s effectiveness was undertaken by the Chairman of the Company
during the year. As part of the evaluation, the Committee reviewed the
following:
· the composition of the Committee;
· the leadership of the Committee Chairman;
· the Committee’s monitoring of compliance with corporate governance
requirements;
· the Committee’s review of the quality and appropriateness of financial
accounting and reporting;
· the Committee’s review of significant risks and internal controls; and
· the Committee’s assessment of the independence, competence and
effectiveness of the Company’s external Auditors.
It was concluded that the Committee was performing satisfactorily and there
were no formal recommendations made to the Board.
Caroline Gulliver
Audit Committee Chairman
24 July 2024
Directors’ Remuneration Report
for the year ended 30 April 2024
Statement from the Chairman
I am pleased to present the Directors’ Remuneration Report for the year
ended 30 April 2024. An ordinary resolution for the approval of this report
will be put to shareholders at the forthcoming Annual General Meeting. The law
requires the Company’s Auditors, PricewaterhouseCoopers LLP, to audit the
Directors’ fees and beneficial interests. Where disclosures have been
audited, they are indicated as such. The Auditors’ opinion is included in
the Independent Auditors’ Report.
During the year under review, the Board consisted entirely of independent
non-executive Directors and the Company had no employees. We have not,
therefore, reported on those aspects of remuneration that relate to executive
directors. Due to the small size and nature of the Board, it is not considered
appropriate for the Company to establish a separate remuneration committee and
the remuneration of the Directors is therefore dealt with by the Board as a
whole.
The Board considers the framework for the remuneration of the Directors on an
annual basis. It reviews the ongoing appropriateness of the Company’s
remuneration policy and the individual remuneration of Directors by reference
to the activities of the Company and comparison with other companies of a
similar structure and size. This is in line with the AIC Code.
For most of the year ended 30 April 2024, Directors’ fees remained at the
rate of £36,000 per annum for the Chairman, £31,000 per annum for the
Chairman of the Audit Committee and £26,000 per annum for other non-executive
Directors, as the limit for Directors’ fees of £150,000 per annum as set
out in MIGO’s Articles of Association (“Articles”) had almost been
reached.
Therefore, a resolution to increase the limit for Directors’ fees in the
Articles to £250,000 was proposed at the AGM in 2023 and approved by
shareholders, thereby enabling the Company’s Directors to be paid in line
with the peer group and the market in general.
Following the increase of the limit prescribed in the Articles, a review of
Directors’ fees was held and fees were increased with effect from 1 January
2024 to £39,300 per annum for the Chairman, £33,800 for the Chairman of the
Audit Committee and £28,400 for other non-executive Directors. This was done
in accordance with our Remuneration Policy which states that Directors’
remuneration is determined with reference to comparable organisations and
appointments and that all levels of remuneration should reflect both the time
commitment and responsibility of the role.
In addition to the fee increase, and in recognition of all the extra work
performed during the search for a new AIFM and Investment Manager, Depositary,
Custodian and the negotiations following on from there, it was also decided
that all Directors in office during 2023 receive compensation of three times
their 2023 monthly fees, payable together with their January fees.
Directors’ Fees for the Year (audited)
The Directors who served during the year received the following emoluments:
Year ended 30 April 2024 Year ended 30 April 2023
2024 2023 2022 2021
Percentage Percentage Percentage Percentage
Fees Expenses Total Fees Expenses Total change change change change
£ £ £ £ £ £ (%) (%) (%) (%)
Richard Davidson
(Chairman) 46,100 † – 46,100 36,000 – 36,000 28.1% 18.4% -1.5% 12.2%
Katya Thomson (Audit
Committee Chairman)1 28,417 † – 28,417 31,000 – 31,000 n/a 17.9% 1.4% 8.3%
Caroline Gulliver (Audit
Committee Chairman)2 11,267 – 11,267 – – – n/a n/a n/a n/a
Hugh van Cutsem3 33,300 † – 33,300 26,000 – 26,000 28.1% 16.6% 1.4% 10.0%
Lucy Costa Duarte4 33,300 † 128 33,428 13,000 178 13,178 n/a n/a n/a n/a
lan Henderson4 33,300 † – 33,300 13,000 – 13,000 n/a n/a n/a n/a
185,684 † 128 185,812 119,000 178 119,178 55.9% 19.5% 19.5% 19.5%
1 Resigned as a Director on 29 December 2023.
2 Appointed as a Director on 29 December 2023.
3 Resigned as a Director on 10 July 2024.
4 Appointed as a Director on 22 November 2022.
† Includes compensation for additional work related to the transfer to the
new AIFM and Investment Manager, of three times the 2023 monthly fees (please
see above).
The Directors’ fees set out in the table above exclude any employers’
national insurance contributions, if applicable. No other forms of
remuneration were received by the Directors and, therefore, the fees represent
the total remuneration of each Director.
No payments were made to former directors of the Company during the year other
than set out in the table above.
Other Benefits
The Company’s Articles of Association provide that Directors are entitled to
be reimbursed for reasonable expenses incurred by them in connection with the
performance of their duties and attendance at Board and General Meetings. The
claims for taxable expenses are set out in the table above.
No pension schemes or other similar arrangements have been established for the
Directors and no Director is entitled to any pension or similar benefits
pursuant to their Letters of Appointment.
Loss of Office
Directors do not have service contracts with the Company but are engaged under
Letters of Appointment. These specifically exclude any entitlement to
compensation upon leaving office for whatever reason.
Performance
The graph below compares the total return (assuming all dividends are sterling
reinvested) to Ordinary shareholders, compared with the Deutsche Numis All
Share Total Returns Index (inc Investment Companies), chosen as it is a broad
equity index. SONIA plus 2%, the Company’s benchmark, is also shown.
Source: Deutsche Numis
Source: Morningstar
The data has been rebased to 100 at 30 April 2014 (the start of the period
covered by the graph).
Relative Importance of Spend on Pay
The table below shows the comparative cost of Directors’ fees compared with
the level of dividend distribution and Company expenses for the years ended 30
April 2024 and 30 April 2023.
2024 2023 Change
£’000 £’000 %
Total Returns 8,323 (8,694) 195.7%
Directors’ fees 186 119 55.9%
Dividend paid 707 100 607.0%
Share Buybacks 5,750 7,405 (22.3%)
Directors’ Beneficial Interests (audited)
The interests of the Directors and persons closely associated with them in the
Ordinary shares of the Company are set out below:
At 30 April 2024 At 30 April 2023
Number of shares Number of shares
Richard Davidson 87,000 70,000
Katya Thomson 1 n/a 14,000
Hugh van Cutsem 2 12,348 12,348
Lucy Costa Duarte 6,115 6,115
Ian Henderson 6,115 6,115
Caroline Gulliver 3 10,000 n/a
1 Resigned at close of business on 29 December 2023.
2 Resigned on 10 July 2024.
3 Appointed from close of business on 29 December 2023.
There have been no changes to any of the above holdings between 30 April 2024
and the date of this report.
There is no requirement under the Company’s Articles of Association for
Directors to hold shares in the Company.
The interests of representatives of the Investment Manager in the Ordinary
shares of the Company are set out below:
At 30 April 2024 At 30 April 2023
Number of shares Number of shares
Nick Greenwood 170,500 170,500
Charlotte Cuthbertson 1,252 1,252
Statement of Voting at Annual General Meeting
The Directors’ Remuneration Report for the year ended 30 April 2023 was
approved by shareholders at the Annual General Meeting held on 20 September
2023.
3,626,200 votes (99.17%) were in favour, with 30,485 votes (0.83%) against and
9,289 votes withheld. Any proxy votes which were at the discretion of the
Chairman were included in the “for” total.
Approval
The Directors’ Remuneration Report was approved by the Board of Directors on
24 July 2024 and signed on its behalf by:
Richard Davidson
Chairman
Directors’ Remuneration Policy
The Board’s policy is that the remuneration of the Directors should reflect
the experience of the Board as a whole, and be determined with reference to
comparable organisations and appointments. The level of remuneration has been
set in order to attract individuals of a calibre appropriate to the future
development of the Company. The remuneration of the Directors will take into
account the duties and responsibilities of the Directors and the expected time
commitment to the Company’s affairs.
The fees of the Directors are determined within the limits set out in the
Company’s Articles of Association, which stipulate that the aggregate amount
of Directors’ fees shall not exceed £250,000 in any financial year or any
greater sum that may be determined from time to time by ordinary resolution of
the Company. The Directors are not eligible for bonuses, pension benefits,
share options, long-term incentive schemes or other benefits. There are no
performance conditions attaching to the remuneration of the Directors as the
Board does not believe this to be appropriate for non-executive Directors.
As set out in the Company’s Articles of Association, Directors are entitled
to be paid all reasonable travel, hotel or other expenses properly incurred in
or about the performance of their duties as Directors, including expenses
incurred in attending Board or shareholder meetings. In certain circumstances,
under HMRC rules, travel and other out of pocket expenses reimbursed to the
Directors may be considered as taxable benefits. Where expenses are classed as
taxable under HMRC guidance, they are shown in the expenses column of the
Directors’ remuneration table above along with the associated tax liability.
Fees for any new Director appointed will be on the above basis. Fees payable
in respect of subsequent periods will be determined following an annual
review. No communications have been received from shareholders regarding
Directors’ remuneration. The Board will consider any comments received from
shareholders on the Directors’ Remuneration Policy.
None of the Directors has a contract of service with the Company, but letters
of appointment setting out the terms of their appointment as non-executive
Directors are in place and are available on request from the Company Secretary
and will be available at the Company’s Annual General Meeting. All Directors
stand for re-election annually. Compensation will not be paid upon loss of
office.
This policy was last approved by shareholders at the Annual General Meeting
held in 2023. 3,623,139 votes (99.14%) were in favour, with 31,375 votes
against (0.86%) and 11,460 votes withheld. Any proxy votes which were at the
discretion of the Chairman were included in the “for” total.
In accordance with regulations, an ordinary resolution to approve the
Directors’ Remuneration Policy will be put to shareholders at least once
every three years, if there have been no proposed changes to the policy in the
meantime. Therefore, the Directors’ Remuneration Policy will next be put to
shareholders at the AGM in 2026.
Current fees
for year to Fees for year to
30 April 2025 30 April 2024 1
£ £
Chairman 39,300 37,100
Audit Committee Chairman 33,800 31,933
Non-executive Director 28,400 26,800
Total aggregate annual fees that may be paid 250,000 250,000 2
1 During the year, with effect from 1 January 2024, fees were increased as
follows: Chairman from £36,000 to £39,300; Audit Committee Chairman from
£31,000 to £33,800 and non-executive Directors from £26,000 to £28,400.
2 At the AGM on 20 September 2023, shareholders approved for the maximum
aggregate annual fees payable to Directors to be raised from £150,000 to
£250,000.
Statement of Directors’ Responsibilities in respect of the Financial
Statements
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 102 “The
Financial Reporting Standard applicable in the UK and Republic of Ireland”,
and applicable law).
Under company law, the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· state whether applicable United Kingdom Accounting Standards, including
FRS 102 have been followed, subject to any material departures disclosed and
explained in the financial statements;
· make judgements and accounting estimates that are reasonable and prudent;
and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ Confirmations
The Directors consider that the Annual Report and accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Company’s position and performance, business
model and strategy.
Each of the Directors, whose names and functions are listed in the ‘Board of
Directors’ confirm that, to the best of their knowledge:
· the Company’s financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, including FRS 102, give a
true and fair view of the assets, liabilities, financial position and profit
of the Company; and
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ Report is
approved:
· so far as the Director is aware, there is no relevant audit information of
which the Company’s auditors are unaware; and
· they have taken all the steps that they ought to have taken as a Director
in order to make themselves aware of any relevant audit information and to
establish that the Company’s auditors are aware of that information.
Approved by the Board of Directors and signed on its behalf by
Richard Davidson
Chairman
24 July 2024
Financial Statements
Income Statement
for the year ended 30 April 2024
Year ended 30 April 2024 Year ended 30 April 2023
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains/(losses) on investments 9 – 7,895 7,895 – (9,676) (9,676)
Income 2 2,131 – 2,131 2,284 – 2,284
Investment management fee 3 (495) – (495) (540) – (540)
Other expenses 4 (997) – (997) (659) – (659)
Return before finance costs and taxation 639 7,895 8,534 1,085 (9,676) (8,591)
Finance costs 5 (211) – (211) (103) – (103)
Return before taxation 428 7,895 8,323 982 (9,676) (8,694)
Taxation 6 – – – – – –
Return after taxation 428 7,895 8,323 982 (9,676) (8,694)
Basic and diluted return per share (pence) 7 1.8 33.8 35.6 3.9 (38.6) (34.7)
The total column of this statement is the Income Statement of the Company. The
supplementary revenue and capital columns have been prepared in accordance
with guidance issued by the AIC.
All revenue and capital items in the above statement derive from continuing
operations. There is no other comprehensive income and therefore no Statement
of Total Comprehensive Income has been presented.
The notes form part of these financial statements.
Statement of Changes in Equity
for the year ended 30 April 2024
Total
Called up Capital Share share-
share redemption premium Special Capital Revenue holders’
capital reserve account reserve reserve reserve funds
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
Balance at 30 April 2022 261 89 27,729 1,222 65,034 349 94,684
Movement for the year
Net proceeds from share issuance 13 4 – 1,359 – – – 1,363
Buyback of shares for cancellation 13 (22) 22 – (1,222) (6,183) – (7,405)
Return for the year – – – – (9,676) 982 (8,694)
Dividends paid 8 – – – – – (100) (100)
Balance at 30 April 2023 243 111 29,088 – 49,175 1,231 79,848
Movement for the year
Buyback of shares for cancellation 13 (18) 18 – – (5,750) – (5,750)
Return for the year – – – – 7,895 428 8,323
Dividends paid 8 – – – – – (707) (707)
Balance at 30 April 2024 225 129 29,088 – 51,320 952 81,714
The notes form part of these financial statements.
Statement of Financial Position
as at 30 April 2024
30 April 2024 30 April 2023
Note £’000 £’000
Fixed assets
Investments 9 83,708 67,855
Current assets
Debtors 11 1,107 361
Cash 2,365 13,139
3,472 13,500
Creditors: amounts falling due within one year
Creditors 12 (5,466) (1,507)
(5,466) (1,507)
Net current (liabilities)/assets (1,994) 11,993
Net assets 81,714 79,848
Share capital and reserves:
Called up share capital 13 225 243
Share premium account 29,088 29,088
Capital redemption reserve 129 111
Capital reserve 51,320 49,175
Revenue reserve 952 1,231
Total shareholders’ funds 81,714 79,848
Net asset value per Ordinary share (pence) 14 362.6 328.6
Number of shares in issue 22,537,797 24,297,797
These financial statements were approved by the Board of Directors and
authorised for issue on 24 July 2024, and signed on its behalf by:
Richard Davidson
Chairman
Company No. 05020752
The notes form part of these financial statements.
Statement of Cash Flow
for the year ended 30 April 2024
Year ended Year ended
30 April 2024 30 April 2023
Note £’000 £’000
Net cash inflow from operating activities 15 662 982
Investing activities
Purchases of investments (31,714) (15,504)
Sales of investments 21,909 22,986
Net cash (outflow)/inflow from investing activities (9,805) 7,482
Financing activities
Issuance of new shares – 1,363
Buyback of shares for cancellation (5,750) (7,404)
Revolving credit facility drawdown 5,000 –
Dividend paid (707) (100)
Finance costs paid (159) (72)
Net cash outflow from financing activities (1,616) (6,213)
(Decrease)/increase in cash (10,759) 2,251
Reconciliation of net cash flow movement in funds:
Cash at beginning of year 13,139 10,891
Exchange rate movements (15) (3)
Increase in cash (10,759) 2,251
(Decrease)/increase in cash (10,774) 2,248
Cash at end of year 2,365 13,139
The notes form part of these financial statements.
Notes to the Financial Statements
For the year ended 30 April 2024
1 Accounting policies
The Company is a public limited company (PLC) limited by shares, incorporated
in England and Wales, with its registered office at 25 Southampton Buildings,
London, WC2A 1AL.
The principal accounting policies, all of which have been applied consistently
throughout the year and in the preparation of the financial statements, are
set out below:
The policies applied in these financial statements are consistent with those
applied in the preceding year.
Accounting convention
The financial statements are prepared on a going concern basis, under the
historical cost convention, modified by the valuation of investments at fair
value, in accordance with the Companies Act 2006, United Kingdom Generally
Accepted Accounting Principles (“UK GAAP”) including FRS102 ‘The
Financial Reporting Standard applicable in the UK and Ireland’ and the
Statement of Recommended Practice regarding the Financial Statements of
Investment Trust Companies and Venture Capital Trusts (“SORP”) issued by
the Association of Investment Companies in July 2022.
The Company’s financial statements are presented in sterling, being the
functional and presentational currency of the Company. All values are rounded
to the nearest thousand pounds (£’000) except where otherwise indicated.
Presentation of the Income Statement
In order to reflect better the activities of an investment trust company and
in accordance with the SORP, supplementary information which analyses the
Income Statement between items of a revenue and capital nature has been
presented alongside the Income Statement. The net revenue return is the
measure the Directors believe appropriate in assessing the Company’s
compliance with certain requirements set out in Sections 1158 and 1159 of the
Corporation Tax Act 2010.
Critical accounting judgements and key sources of estimation uncertainty
Critical accounting judgements and key sources of estimation uncertainty used
in preparing the financial information are regularly evaluated and are based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable. The resulting estimates will, by
definition, seldom equal the related actual results. There are no critical
accounting judgements made in preparing the financial statements.
The key sources of estimation and uncertainty that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities relate to the valuation of the Company’s unquoted investments;
0.2% (2023: 0.3%) of the Company’s portfolio is comprised of unquoted
investments. These are valued in line with the accounting policy for
investments starting on the following page. Given the scale of the Company’s
unquoted portfolio, there are no material sources of estimation uncertainty.
Going concern
The Directors have made an assessment of the Company’s ability to continue
as a going concern and, having taken into account the liquidity of the
Company’s portfolio and the Company’s financial position in respect of its
cash flows and borrowing facilities, are satisfied that the Company has the
resources to continue in business for 12 months from the date of approval of
this report. The Company, therefore, continues to adopt the going concern
basis in preparing its financial statements. Further information on the
Company’s borrowing facility is given in note 11.
Income recognition
Dividends receivable are recognised when the investments concerned are quoted
‘ex-dividend’. Where no ex-dividend date is quoted, dividends are
recognised when the Company’s right to receive payment is established.
Special dividends of a revenue nature are recognised through the revenue
column of the Income Statement. Special dividends of a capital nature are
recognised through the capital column of the Income Statement.
Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
through the revenue column of the Income Statement except for transaction
costs which are incidental to the acquisition or disposal of an investment,
which are included within gains/(losses) on investments and disclosed in note
9.
Foreign currency transactions
Transactions denominated in foreign currencies are translated into sterling at
the rates of exchange ruling at the date of the transaction.
Investments are converted to sterling at the rates of exchange ruling at the
Statement of Financial Position date. Any gains or losses on the
re-translation of assets or liabilities are taken to the revenue or capital
column of the Income Statement, depending on whether the gain or loss is of a
capital or revenue nature.
Dividends payable
Dividends are included in the financial statements in the year in which they
are paid.
Investments
In accordance with FRS 102 Section 11: Basic Financial Investments and Section
12: Other Financial Investment Issues, investments are measured initially, and
at subsequent reporting dates, at fair value, and are recognised and
de-recognised at trade date where a purchase or sale is under a contract whose
terms require delivery within the time frame established by the market
concerned.
For quoted securities fair value is either bid price or the closing price
where the security is primarily traded via a trading service that provides an
end of day closing auction with guaranteed liquidity to investors.
The valuation of unquoted securities is carried out in accordance with the
International Private Equity and Venture Capital Association valuation
guidelines. Unquoted securities are valued using either:
* the last published net asset value of the security after adjustment for
factors that the AIFM and Board believe would affect the amount of cash that
the Company would receive if the security were realised as at the Statement of
Financial Position date; or
* the estimated, discounted cash distribution based on information provided by
the management or liquidators of the security. The discount applied will take
account of various factors, including expected timings of the cash flow and
the level of certainty on the estimate.
Changes in fair value and gains or losses on disposal are included in the
Income Statement as a capital item.
Cash
Cash comprises solely cash at bank.
Bank loans and finance costs
Bank loans are initially recognised at cost, being the fair value of the
consideration received less issue costs where applicable. After initial
recognition, bank loans are recognised at amortised cost using the effective
interest rate method, with the interest expense recognised on an effective
yield basis.
Taxation
The charge for taxation is based on net revenue for the year.
The tax effect of different items of income/gain and expenditure/loss is
allocated between capital and revenue as set out in note 6 to the financial
statements. The standard rate of corporation tax is applied to taxable net
revenue. Any adjustment resulting from relief for overseas tax is allocated to
the revenue reserve.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the Statement of Financial Position date where
transactions or events that result in an obligation to pay more, or right to
pay less, tax in future have occurred at the Statement of Financial Position
date. This is subject to deferred tax assets only being recognised if it is
considered more likely than not that there will be suitable profits from which
the future reversal of the underlying timing differences can be deducted.
Timing differences are differences arising between the Company’s taxable
profits and its results as stated in the accounts which are capable of
reversal in one or more subsequent periods. Deferred tax is measured without
discounting and based on enacted tax rates. Due to the Company’s status as
an investment trust, and the intention to meet the conditions required to
obtain approval under Sections 1158 and 1159 of the Corporation Tax Act 2010,
the Company has not provided for deferred tax on any capital gains and losses
arising on the revaluation or disposal of investments.
Capital reserve
Gains or losses on disposal of investments and changes in fair values of
investments (investment holding gains) are charged to the capital column of
the Income Statement and taken to the Capital reserve.
Certain expenses net of any related taxation effects are charged to this
reserve in accordance with the expenses policy above. The amounts within the
Capital Reserve less unrealised gains and losses, which are not readily
convertible to cash are available for distribution.
Revenue reserve
The revenue reserve is distributable by way of dividends, when positive. While
the reserve is negative no dividends can be distributed by way of dividend
from this reserve.
Capital redemption reserve
This reserve arises when shares are bought back by the Company and
subsequently cancelled at which point an amount equal to the par value of the
shares cancelled is transferred from share capital to this reserve. This
reserve is not distributable.
Financial assets and liabilities
The only financial assets measured at fair value through profit or loss are
the investments held by the Company, refer to note 8. All other financial
assets (being Debtors and Cash) are measured at amortised cost. All financial
liabilities (being Borrowings and Creditors) are measured at amortised cost.
2 Income
Year ended Year ended
30 April 2024 30 April 2023
£’000 £’000
Income from investments:
UK dividends 847 898
Overseas dividends 957 991
Property income dividends 45 227
1,849 2,116
Other income
Interest income 282 168
Total income 2,131 2,284
3 Investment management fee
Year ended 30 April 2024 Year ended 30 April 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee - Asset Value Investors (from 16 December 2023) 186 – 186 – – –
Investment management fee - Premier Miton (to 15 December 2023) 309 – 309 540 – 540
Further details on the investment management fee arrangements can be found in
the Strategic Report.
4 Other expenses
Year ended Year ended
30 April 2024 30 April 2023
£’000 £’000
Frostrow Capital administration fees 190 204
Audit fees* 56 54
Directors’ remuneration** 186 119
Employers NIC on directors’ remuneration 14 6
Legal and professional fees 310*** 51
Broker fees 42 42
Other expenses 199 183
997 659
* Exclusive of VAT. The Company’s auditors provided no non-audit services
during the year (2023: none).
** See Directors’ Remuneration Report for analysis.
*** Expense for the year ended 30 April 2024 includes £270,000
incurred on the transition of Portfolio Manager and AIFM from Premier Miton to
Asset Value Investors Limited, and of Depositary and Custodian from Bank of
New York (International) Limited to JP Morgan Europe Limited.
5 Finance costs
Year ended 30 April 2024 Year ended 30 April
2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Finance costs payable 211 – 211 103 – 103
Relates to interest charged, commitment fees and arrangement fees on the
revolving loan facility, details of which are disclosed in note 11.
6 Taxation
Analysis of tax charge for the year
Year ended 30 April 2024 Year ended 30 April
2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Corporation tax at 25.0% (2023: 19.5%) – – – – – –
Overseas taxation – – – – – –
Factors affecting total tax charge for the year
The tax charge for the year is lower than (2023: lower than) the standard rate
of Corporation Tax in the UK of 25.0% (2023: 19.5%). The differences are
explained below:
Year ended 30 April 2024 Year ended 30 April
2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Return before taxation 428 7,895 8,323 982 (9,676) (8,694)
Theoretical tax at UK corporation tax rate of 25% (2023: 19.5%) 107 1,974 2,081 191 (1,887) (1,696)
Effects of:
– Non taxable dividends (451) – (451) (368) – (368)
– (Gains)/Losses on investment – (1,974) (1,974) – 1,887 1,887
– Unrelieved expenses 344 – 344 177 – 177
Total tax charge/(credit) for the year – – – – – –
Provision for deferred tax
Approved investment trusts are exempt from tax on capital gains made within
the Company.
As at 30 April 2024, based on current estimates and including the accumulation
of net allowable losses, the Company has unrelieved losses of £13,836,880
(2023: £12,461,253) that are available to offset future taxable revenue. A
deferred tax asset of £3,459,220 (2023: £3,115,313) has not been recognised,
based on the effective tax rate of 25.0% (2023: 25.0%), because the Company is
not expected to generate sufficient taxable income in the near future periods
in excess of the available deductible expenses and accordingly, the Company is
unlikely to be able to reduce future tax liabilities through the use of
existing surplus losses.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and intends
to continue for the foreseeable future to meet) the conditions for approval as
an investment trust company.
7 Return per share
The Capital, Revenue and Total Return per share are based on the net returns
shown in the Income Statement and the weighted average number of shares in
issue 23,395,667 (2023: 25,089,586).
There are no dilutive instruments issued by the Company.
8 Dividends
During the year to 30 April 2024, the Company paid a final dividend of 3.0
pence per share or £707,000 in total in relation to the financial year ended
30 April 2023.
During the year to 30 April 2023, the Company paid a final dividend of 0.4
pence per share or £100,000 in total in relation to the financial year ended
30 April 2022.
A final dividend of 0.6 pence per share in relation to the financial year
ended 30 April 2024 has been recommended by the Board. If approved by
shareholders, the related amount will be reflected in the Company’s Annual
Report for the year ended 30 April 2025.
9 Investments
Year ended Year ended
30 April 2024 30 April 2023
£’000 £’000
Investment portfolio summary
Opening book cost 67,356 67,802
Opening investment holding gains 499 15,678
67,855 83,480
Analysis of investment portfolio movements
Opening valuation 67,855 83,480
Movements in the year:
Purchases at cost 30,638 16,766
Sales – proceeds (22,695) (22,715)
Gains/(losses) on investments 7,910 (9,676)
Valuation at 30 April 83,708 67,855
Cost at 30 April 80,745 67,356
Investment holding gains at 30 April 2,963 499
83,708 67,855
Reconciliation on net movement in investment holding gains
Year ended Year ended
30 April 2024 30 April 2023
£’000 £’000
Gains on disposal 5,446 5,503
Movement in investment holding gains/(losses) 2,464 (15,179)
Net movement in investment holding gains 7,910 (9,676)
A list of the portfolio holdings by their fair value is given in the Portfolio
Valuation.
Transaction costs incidental to the acquisitions of investments totalled
£101,000 (2023: £61,000) and disposals of investments totalled £20,000
(2023: £8,000) for the year. These are included in gains on investments in
the Income Statement.
Fair value hierarchy
FRS 102 requires financial companies to disclose the fair value hierarchy that
classifies financial instruments measured at fair value at one of three levels
based on the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in
its entirety, which are described as follows:
Classification Input
Level 1 Valued using quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 Valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1; and
Level 3 Valued by reference to valuation techniques using inputs that are not based on observable market data.
The valuation techniques used by the Company are explained in the accounting
policies above. The table below sets out the Company’s fair value hierarchy
measurements as at 30 April 2024 and 30 April 2023.
30 April 2024 30 April 2023
£’000 £’000
Level 1
Quoted equities 83,512 67,672
Total Level 1 83,512 67,672
Level 2
Equities – –
Preference shares – –
Total Level 2 – –
Level 3
Equities 196 144
Preference shares – 39
Total Level 3 196 183
Total 83,708 67,855
Level 1 financial assets are valued at the closing prices quoted by Thomson
Reuters as at 30 April 2024 and the Company does not adjust the quoted prices
of Level 1 instruments.
During the year, £30,000 of level 1 assets (2023: £33,000) were delisted and
transferred to level 3 and no level 2 assets (2023: £40,000) were transferred
to level 3.
Analysis of movements in Level 3 investments
Year ended Year ended
30 April 2024 30 April 2023
Level 3 Level 3
£’000 £’000
Opening fair value of investments 183 173
Transfer from Level 1 30 33
Transfer from Level 2 – 40
Movement in investment holding gains (17) (63)
Closing fair value of investments 196 183
A 5% increase on the NAV of Level 3 investments would increase gains on
investments in the Income Statement by £9,800 (2023: £9,000) and vice versa.
10 Significant interests
The Company had holdings of 3% or more of the voting rights attached to shares
that are material in the context of the financial statements in the following
investments:
30 April 2024
% of voting
rights
Security
Vinacapital Vietnam Opportunity Fund Ltd 6.1%
Georgia Capital PLC 6.0%
Baker Steel Resources Trust Limited 4.2%
Oakley Capital Investments Limited 4.2%
JPMorgan Indian Investment Trust PLC 3.7%
Aquila European Renewables PLC 3.7%
Tufton Oceanic Assets Limited 3.6%
30 April 2023
% of voting
rights
Security
Chelverton Growth Trust PLC 11.0%
Baker Steel Resources Trust Limited 6.6%
Geiger Counter Limited (Ordinary Shares) 5.1%
Downing Strategic Micro-Cap Investment Trust plc 4.7%
Dunedin Enterprise Investment Trust PLC 4.7%
Cambium Global Timberland Limited 4.5%
EPE Special Opportunities Limited 4.2%
Real Estate Investors PLC 4.1%
Macau Property Opportunities Fund Limited 4.0%
River and Mercantile UK Micro Cap Investment Company Limited 3.1%
11 Debtors
30 April 2024 30 April 2023
£’000 £’000
Sales of investments awaiting settlement 786 –
Dividends and interest receivable 219 306
Prepayments and other debtors 102 55
1,107 361
12 Creditors: amounts falling due within one year
30 April 2024 30 April 2023
£’000 £’000
Drawdowns from revolving credit facility 5,000 –
Purchases of investments awaiting settlement 186 1,262
Other creditors 280 245
5,466 1,507
The Company has a £10,000,000 (2023: £10,000,000) unsecured revolving credit
facility, which was £5,000,000 drawn as at 30 April 2024 (2023: £nil). A
bank loan with the Royal Bank of Scotland International Limited, London Branch
(the “Bank”) was in place during the year, bearing interest at the rate of
1.45% over SONIA on any drawn balance and 0.72% on any undrawn balance. The
loan facility was agreed on 28 January 2022 and expired in January 2024.
On 13 December 2023, the loan facility was amended to take into account the
changeover from Premier Miton as AIFM and Investment Manager, to Asset Value
Investors Limited as well as the change in Depositary and Custodian from Bank
of New York (International) Limited to JP Morgan.
On 23 January 2024, a one year extension to the loan facility was agreed with
the same terms to take effect on 28 January 2024. The arrangement fee for the
extension was £60,000, and the extended loan facility will expire in January
2025 unless renewed.
The bank loan facility contains covenants which require that net borrowings
will not at any time exceed 25% of the adjusted net asset value, which shall
at all times be equal to or greater than £25,000,000. If the Company breaches
either covenant, then it is required to notify the Bank of any default and any
steps being taken to remedy it.
13 Called up share capital
30 April 2024 30 April 2023
£’000 £’000
Allotted, called-up and fully paid:
22,537,797 (2023: 24,297,797) Ordinary shares of 1p each 225 243
1,760,000 shares were bought back in the year for cancellation (2023:
2,222,459) for a total consideration of £5,750,000 (2023: £7,405,000). No
shares were held in Treasury during the year (2023: none). During the year, no
new shares were issued by the Company (2023: 410,000 for total proceeds of
£1,363,000).
Since the year end, 75,000 further shares were bought back for cancellation.
14 Net asset value per Ordinary share
The net asset value per Ordinary share is based on net assets at the year-end
as shown in the Statement of Financial Position of £81,714,000 (2023:
£79,848,000) and 22,537,797 (2023: 24,297,797) Ordinary shares, being the
number of Ordinary shares in issue at the year end.
15 Reconciliation of net return before finance costs and taxation to net cash
inflow from operating activities
Year ended Year ended
30 April 2024 30 April 2023
£’000 £’000
Return before finance costs and taxation 8,534 (8,591)
Adjustments for:
(Gains)/losses on investments (7,895) 9,676
Decrease in creditors (39) (10)
Decrease/(increase) in debtors 62 (93)
Net cash inflow from operating activities 662 982
16 Analysis of financial assets and liabilities
The Company’s financial instruments comprise investments, cash balances and
debtors and creditors that arise from its operations.
The risk management policies and procedures outlined in this note have not
changed substantially from the previous year.
The principal risks the Company faces in its portfolio management activities
are:
* Market risk – arising from fluctuations in the fair value or future cash
flows of a financial instrument used by the Company because of changes in
market prices. Market risk comprises three types of risk: currency risk,
interest rate risk, and other price risk: * Currency risk – arising from
the value of future transactions, and financial assets and liabilities
denominated in foreign currencies fluctuating due to changes in currency
rates;
* Interest rate risk – arising from fluctuations in the fair value or future
cash flows of a financial instrument because of changes in interest rates; and
* Other price risk – arising from fluctuations in the fair value of
investments due to changes in market prices.
* Liquidity risk – arising from any difficulties in meeting obligations
associated with financial liabilities.
* Credit risk – arising from financial loss for the Company where the other
party to a financial instrument fails to discharge an obligation.
The AIFM monitors the financial risks affecting the Company on a daily basis.
The Directors receive financial information on a quarterly basis which is used
to identify and monitor risk.
The AIFM’s policies for managing these risks are summarised below and have
been applied throughout the year:
Currency Risk
Although the Company’s performance is measured in sterling, a proportion of
the Company’s assets may be either denominated in other currencies or are in
investments with currency exposure. At the year end, the Company held seven
(2023: three) US dollar denominated investments with the sterling equivalent
of £9,353,000 (2023: £1,332,000). The Company also held two (2023: two)
investments with the sterling equivalent of £3,153,000 denominated in euro
(2023: £2,261,000).
If sterling strengthens against the US dollar and euro 10% (2023: 10%), it
would have the effect, with all other variables held constant, of reducing the
net capital return before taxation by £1,137,000 (2023: £327,000). If
sterling weakens against the US dollar and euro by 10%, it would have the
effect of increasing the net capital return before taxation by £1,390,000
(2023: £399,000).
An analysis of the indirect geographical exposure is shown above.
The Investment Manager reviews the risks of adverse currency movements and
where necessary may use derivatives to mitigate the risk of adverse currency
movements, although none has been used to date.
Interest Rate Risk
The Company finances its operations through existing reserves and a revolving
credit facility. The Company’s financial assets and liabilities, excluding
short-term debtors and creditors, may include investments in fixed interest
securities, whose fair value may be affected by movements in interest rates.
Details of such holdings can be found in the Portfolio Valuation.
At the end of the year, the Company had in place a revolving credit facility
of £10,000,000 with the Royal Bank of Scotland International (London Branch)
plc. The facility was renewed in January 2024 at an interest rate of 1.45%
over SONIA on any drawn balance and 0.72% on any undrawn balance. As at 30
April 2024, drawdown from the facility amounted to £5,000,000 (2023:
undrawn). The amount of borrowings and approved levels are monitored and
reviewed regularly by the Board.
The Company’s cash earns interest at a variable rate which is subject to
fluctuations in interest rates. At the year end, the Company’s cash balances
were £2,365,000 (2023: £13,139,000). £282,000 in interest income was
received in the year (2023: £168,000).
Other Price Risk
Other price risk arises mainly from uncertainty about future prices of
financial instruments. The value of shares and the income from them may fall
as well as rise and shareholders may not get back the full amount invested.
The AIFM continues to monitor the prices of financial instruments held by the
Company on a real time basis. Adherence to the Company’s investment
objective and policy shown in the Business Review mitigates the risk of
excessive exposure to one issuer or sector.
The Board manages market risk inherent in the investment portfolio by ensuring
full and timely access to relevant information from the Investment Manager.
The Board meets regularly and at each meeting reviews the investment
performance, the investment portfolio and the rationale for the current
investment positioning to ensure consistency with the Company’s investment
objective and policy. The portfolio does not seek to reproduce any index,
investments are selected based upon the merit of individual companies and
therefore the portfolio’s performance may well diverge significantly from
the benchmark.
A list of investments held by the Company at 30 April 2024 is shown in the
Portfolio Valuation. All these investments are subject to price risk.
It is the Board’s policy to hold an appropriate spread of investments in the
portfolio in order to reduce the risk arising from factors specific to a
particular country or sector. The allocation of assets to international
markets and the stock selection process both act to reduce market risk. The
Investment Manager actively monitors market prices throughout the year and
reports to the Board, which meets regularly in order to review the investment
strategy. The investments held by the Company are listed on various stock
exchanges worldwide, but predominantly in the UK.
If the investment portfolio valuation fell by 10% (2023: 10%) from the amount
detailed in the financial statements as at 30 April 2024, it would have the
effect, with all other variables held constant, of reducing the net capital
return before taxation by £8,371,000 (2023: £6,786,000). An increase of 10%
in the investment portfolio valuation would have an equal and opposite effect
on the net capital return before taxation and equity reserves.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in
meeting its financial liabilities as they fall due. The Investment Manager
does not invest in unquoted securities on behalf of the Company. However, the
investments held by the Company includes UK AIM quoted and NEX quoted
companies which can have limited liquidity and could sometimes be delisted
too. Short-term flexibility is achieved through the use of drawdowns from the
revolving credit facility.. Liquidity risk is mitigated by the fact that the
Company has £2,365,000 (2023: £13,139,000) cash at bank which can satisfy
its creditors and that, as a closed-end fund, assets do not need to be
liquidated to meet redemptions, and sufficient liquid investments are held to
be able to meet any foreseeable liabilities.
Credit Risk
Credit risk is the risk of financial loss to the Company if a counterparty
fails to meet its obligations.
The risk is minimised by using only approved and reputable counterparties with
the main counterparty being the Company’s Depositary. Under the UK AIFMD,
the Depositary is liable for the loss of any financial asset held by it or its
delegates and, in accordance with its agreement with the Company, is required
to segregate such assets from its own assets.
As at 30 April 2024, the credit risk exposure on the Company’s financial
assets is £3,472,000 (2023: £13,500,000).
Capital Management
The Company does not have any externally imposed capital requirements, other
than those relating to the revolving credit facility. The main covenants
relating to the loan facility are:
* net borrowings will not at any time exceed 25% of the adjusted net asset
value; and
* adjusted net asset value shall at all times be equal to or greater than
£25,000,000.
The Board considers the capital of the Company to be its issued share capital,
reserves and debt. The capital of the Company is managed in accordance with
its investment policy in pursuit of its investment objective detailed in the
Business Review and by share issuance and buybacks.
30 April 2024 30 April 2023
£’000 £’000
The Company’s capital at 30 April comprised:
Debt
Drawdown from revolving credit facility 5,000 –
Equity
Equity share capital 225 243
Retained earnings and other reserves 81,489 79,605
81,714 79,848
Debt as a percentage of net assets 6.1% –
Gearing
Gearing amplifies the impact of gains or losses on the net asset value of the
Company. It can be positive for a company’s performance, although it can
have negative effects on performance in falling markets. It is the Company’s
policy to determine the adequate level of gearing appropriate to its own risk
profile.
17 Related parties
The following are considered to be related parties:
• Key management personnel
Details of the remuneration of all Directors can be found in note 4 to the
Financial Statements and in the Directors’ Remuneration Report.
• Other related parties
Hugh van Cutsem, who resigned from the Board with effect from 10 July 2024, is
a founding partner of Kepler Partners LLP, a firm that issues research on MIGO
Opportunities Trust plc for a fee of £18,000 (2023: £15,000) per annum. No
amounts were due to Kepler Partners LLP at the year-end (2023: nil).
18 Transactions with management
Premier Portfolio Managers Limited (the “AIFM”) and Premier Fund Managers
Limited (the “Investment Manager”) were considered related parties under
the Listing Rules.
With effect from the close of business on 15 December 2023, Asset Value
Investors Limited took over as AIFM and Investment Manager and is now
considered a related party under the Listing Rules. Details of the IMA with
the new AIFM and Investment Manager are set out in the Business Review and
also in note 3 above.
19 Contingent liabilities and capital commitments
As at 30 April 2024 and 30 April 2023, there were no capital commitments in
respect of investments not fully paid up and there were no contingent
liabilities.
20 Subsequent event
The Company drew down a further £5 million from the credit facility in June
2024 and the facility is now fully drawn at £10 million. There are no other
post balance sheet events which would require adjustment of or disclosure in
the financial statements.
Further Information and Notice of AGM
Shareholder Information
Share Dealing
Shares can be traded through your usual stockbroker or other authorised
intermediary. The Company’s Ordinary shares are traded on the main market of
the London Stock Exchange. The Company’s shares are fully qualifying
investments for Individual Savings Accounts (“ISAs”).
Share Register Enquiries
The register for the Company’s ordinary shares is maintained by
Computershare Investor Services PLC. If you would like to notify a change of
name or address, please contact the registrar in writing to Computershare
Investor Services PLC, the Pavilions, Bridgwater Road, Bristol BS99 6ZZ.
With queries in respect of your shareholdings, please contact Computershare on
0370 889 3231 (lines are open from 8.30 am to 5.30 pm, UK time, Monday to
Friday). Alternatively, you can email WebCorres@computershare.co.uk or contact
the Registrar via www.investorcentre.co.uk.
Share Capital and Net Asset Value Information
Ordinary 1p shares 22,537,797 as at 30 April 2024
SEDOL number 3436594
ISIN number GB0034365949
Bloomberg symbol MIGO
The Company releases its net asset value per Ordinary share to the London
Stock Exchange daily.
Financial Calendar
Company’s year end 30 April Final dividend paid 4 October
Annual results announced July Company’s half-year end 31 October
Annual General Meeting 18 September 2024 Half-Yearly results announced December
Annual and Half-Yearly Reports
Copies of the Annual Reports are available from the Company Secretary on 0203
008 4910 and on the Company’s website, www.migoplc.co.uk. Copies of the
Half-Yearly Reports are only available on the Company’s website.
AIFM: Asset Value Investors Limited
The Company’s AIFM is Asset Value Investors Limited, which took over from
Premier Portfolio Managers Limited at the close of business on 15 December
2023.
Investor updates in the form of monthly factsheets are available from the
Company’s website, www.migoplc.co.uk
Association of Investment Companies
The Company is a member of the Association of Investment Companies.
Legal Entity Identifier
21380075RRMI7D4NQS20
UK AIFMD Disclosures (unaudited)
Alternative Investment Fund Managers’ Directive (“UK AIFMD”) Disclosures
The Company is classified as an Alternative Investment Fund under UK AIFMD and
is therefore required to have an Alternative Investment Fund Manager
(“AIFM”). The UK AIFMD legislation requires the AIFM to establish and
maintain remuneration policies for its staff which are consistent with and
promote sound and effective risk management.
During the financial year ended 30 April 2024, until the close of business on
15 December 2023, the Company’s Alternative Investment Fund Manager
(“AIFM”) was Premier Portfolio Managers Limited. At the close of business
on 15 December 2023, Asset Value Investors Limited took over as the new AIFM
and Investment Manager.
Pre-investment Disclosures of the AIFM
The AIFMD requires certain information to be made available to investors in
Alternative Investment Funds (“AIFs”) before they invest and requires that
material changes to this information be disclosed in the annual report of each
AIF. Those disclosures that are required to be made pre-investment are
included within an AIFMD Investor Disclosure Document. This, together with
other necessary disclosures required under AIFMD, can be found on the
Company’s website www.migoplc.co.uk.
Remuneration Disclosure
All authorised AIFMs are required to comply with the AIFMD Remuneration Code.
The AIFM’s remuneration disclosures can be found on the Company’s website
www.migoplc.co.uk..
AIFMD Leverage Limits
The maximum level of leverage which the Investment Manager may employ on
behalf of the Company and the levels as at 30 April 2024 are set out below. A
figure of 100% means that the exposure is equal to the net asset value and the
AIF has no leverage.
Leverage exposure Maximum gross leverage Maximum commitment
Maximum level 200% 200%
Actual level 100% 100%
Source: Asset Value Investors Limited
Glossary and Alternative Performance Measures
Adjusted Market Capitalisation
The average of the mid market prices for an Ordinary share as derived from the
Daily Official List of the London Stock Exchange on each business day in the
relevant calendar month multiplied by the number of Ordinary Shares in issue
on the last business day of the relevant calendar month, adjusted by adding
the amount per Ordinary Share of all dividends declared in respect of which
Ordinary Shares have gone “ex div” in the relevant calendar month,
excluding any Ordinary Shares held in treasury.
Alternative Performance Measures
Alternative Performance Measures (‘APMs’) are numerical measures of
current, historical or future financial performance, financial position or
cash flow that are not GAAP measures. APM’s are intended to supplement the
information in the financial statements providing useful industry-specific
information that can assist shareholders to better understand the performance
of the Company.
UK AIFMD
Agreed by the European Parliament and the Council of the European Union and
transposed into UK legislation, the UK AIFMD classifies certain investment
vehicles, including investment companies, as Alternative Investment Funds
(“AIFs”) and requires them to appoint an Alternative Investment Fund
Manager (“AIFM”) and depositary to manage and oversee the operations of
the investment vehicle. The Board of the Company retains responsibility for
strategy, operations and compliance and the Directors retain a fiduciary duty
to shareholders.
AIFM
The Alternative Investment Fund Manager of the Company is Asset Value
Investors Limited. The AIFM was appointed with effect from the close of
business on 15 December 2023, taking over from Premier Portfolio Managers
Limited.
Premium/(Discount) (APM)
If the share price of an investment trust is lower than the NAV per share, the
shares are said to be trading at a discount. If the share price is higher than
the NAV per share, the shares are said to be trading at a premium. The size of
the discount or premium is calculated by subtracting the share price from the
NAV per share and then dividing by the NAV per share.
Year ended Year ended
30 April 2024 30 April 2023
Closing NAV per share (p) 362.6 328.6
Closing share price (p) 346.0 318.5
Discount (4.6)% (3.1)%
Gearing (APM)
Gearing amplifies the impact of gains or losses on the net asset value of the
Company. It can be positive for a company’s performance, although it can
have negative effects on performance when underlying assets fall in value. It
is the Company’s policy to determine the adequate level of gearing
appropriate to its own risk profile.
Gearing is calculated in accordance with guidance from the AIC as follows:
The amount of borrowings as a proportion of net assets, expressed as a
percentage.
As at As at
30 April 2024 30 April 2023
£’000 £’000
Total borrowings 5,000 –
Total net assets 81,714 79,848
Gearing 6.1% –
Leverage
Leverage is defined in the UK AIFMD as any method by which the AIFM increases
the exposure of an AIF. In addition to the gearing limit the Company also has
to comply with the UK AIFMD leverage requirements. This limit is expressed as
a % with 100% representing no leverage or gearing in the Company. There are
two methods of calculating leverage as follows:
The Gross Method is calculated as total exposure divided by shareholders’
funds. Total exposure is calculated as net assets, less cash and cash
equivalents, adding back cash borrowing.
The Commitment Method is calculated as total exposure divided by
Shareholders’ Funds. In this instance total exposure is calculated as net
assets, less cash and cash equivalents, adding back cash borrowing adjusted
for netting and hedging arrangements.
Net Asset Value per share (“NAV”) (APM)
The NAV is shareholders’ funds expressed as an amount per individual share.
Shareholders’ funds are the total value of all the Company’s assets, at
current market value, having deducted all liabilities and prior charges at
their par value (or at their asset value).
Ongoing Charges (APM)
As recommended by the AIC, ongoing charges are defined as the Company’s
annualised revenue and capitalised expenses (excluding finance costs and
certain non-recurring items) expressed as a percentage of the average monthly
net assets of the Company during the year.
Year ended Year ended
30 April 2024 30 April 2023
£’000 £’000
Total expenses from note 3 and note 4 1,492 1,199
Less non-recurring expenses (252) –
Total ongoing charges 1,240 1,199
Average net assets 80,850 83,660
Ongoing charges ratio 1.5% 1.4%
The ongoing charges percentage reflects the costs incurred directly by the
Company which are associated with the management of a static investment
portfolio. Consistent with the AIC guidance, the ongoing charges percentage
excludes non-recurring items. Non-recurring expenses in the year ended 30
April 2024 relate to costs incurred on the transition of Investment Manager
and AIFM from Premier Miton to Asset-Value Investors.
Total Returns (APM)
The combined effect of any dividends paid, together with the rise or fall in
the share price or NAV. Total return statistics enable the investor to make
performance comparisons between trusts with different dividend policies. Any
dividends (after tax) received by a shareholder are assumed to have been
reinvested in either additional shares of the trust at the time the shares go
ex-dividend (the share price total return) or in the assets of the trust at
its NAV per share (the NAV total return). As the Company does not normally pay
dividends the NAV and share price total return are calculated by taking the
increase in the NAV or share price during the relevant period and dividing by
the opening NAV or share price.
NAV Total Return (APM)
6 April 2004
One year to Three years to Five years to Ten years to (launch) to
30 April 2024 30 April 2024 30 April 2024 30 April 2024 30 April 2024
Closing NAV per share (p) 362.6 362.6 362.6 362.6 362.6
Opening NAV per share (p) 328.6 345.9 275.6 167.4 102.5
Dividend reinvested (p) 3.0 3.4 3.4 3.4 3.4
NAV total return 11.3% 5.8% 32.8% 118.6% 257.1%
Share Price Total Return (APM)
6 April 2004
One year to Three years to Five years to Ten years to (launch) to
30 April 2024 30 April 2024 30 April 2024 30 April 2024 30 April 2024
Closing share price (p) 346.0 346.0 346.0 346.0 346.0
Opening share price (p) 318.5 346.0 276.5 149.5 97.3
Dividend reinvested (p) 3.0 3.4 3.4 3.4 3.4
Share price total return 9.6% 1.0% 26.4% 133.7% 259.1%
NAV Volatility
Volatility is related to the degree to which NAV or prices differ from their
mean (the standard deviation). Volatility is calculated by taking the daily
NAV or closing prices over the relevant year and calculating the standard
deviation of those prices. The daily standard deviation is then multiplied by
an annualisation factor being the square root of the number of the trading
days in the year.
Year ended Year ended
30 April 2024 30 April 2023
£’000 £’000
Standard deviation of daily NAV (A) 0.4% 0.5%
Number of trading days 253 250
Square root of the number of trading days (B) 15.9 15.8
Annualised volatility (A*B) 6.1% 8.2%
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the twentieth ANNUAL GENERAL MEETING of MIGO
Opportunities Trust plc will be held on Wednesday, 18 September 2024 at 12.00
noon at the offices of Frostrow Capital LLP, 25 Southampton Buildings, London
WC2A 1AL for the following purposes:
Resolutions 1 to 10 (inclusive) are proposed as Ordinary Resolutions and
Resolutions 11 to 15 (inclusive) are proposed as Special Resolutions.
Ordinary business
1 To receive the Strategic Report, Directors’ Report and
Auditors’ Report and the audited financial statements for the year ended 30
April 2024.
2 To receive and approve the Directors’ Remuneration Report
for the year ended 30 April 2024.
3 To approve a final dividend of 0.6p per share.
4 To re-elect Mr Richard Davidson as a Director of the
Company.
5 To elect Ms Caroline Gulliver as a Director of the Company.
6 To re-elect Ms Lucy Costa Duarte as a Director of the
Company.
7 To re-elect Mr Ian Henderson as a Director of the Company.
8 To re-appoint PricewaterhouseCoopers LLP as Auditor of the
Company.
9 To authorise the Audit Committee to determine the
Auditor’s remuneration.
Special business
10 THAT the Directors of the Company be and are hereby generally and
unconditionally authorised (in substitution for any authorities previously
granted to the Directors to the extent unused) pursuant to Section 551 of the
Companies Act 2006 (the “Act”) to exercise all the powers of the Company
to allot shares in the Company and to grant rights to subscribe for or to
convert any security into shares in the Company (“Rights”) up to an
aggregate nominal amount of £74,875 (representing approximately one-third of
the issued share capital (excluding treasury shares) as at the date of the
notice of AGM or, if changed, the number representing one third of the issued
share capital of the Company at the date at which this resolution is passed)
during the period commencing on the passing of this Resolution and expiring
(unless previously revoked, varied, renewed or extended by the Company in
general meeting) at the conclusion of the Annual General Meeting of the
Company to be held in 2025 (the “Section 551 period”), but so that the
Directors may, at any time prior to the expiry of the Section 551 period, make
offers or agreements which would or might require shares to be allotted or
Rights to be granted after the expiry of the Section 551 period and the
Directors may allot shares or grant Rights in pursuance of such offers or
agreements as if the authority conferred by this Resolution had not expired.
11 THAT in substitution for any existing power under Section 570 of
the Companies Act 2006 (the “Act”), but without prejudice to the exercise
of any such power prior to the date of this Resolution, the Directors be and
they are hereby empowered, in accordance with Sections 570 and 573 of the Act,
to allot equity securities (as defined in Section 560(1) of the Act) for cash,
pursuant to the authority under Section 551 of the Act conferred on the
Directors by Resolution 10 above as if Section 561(1) of the Act did not apply
to any such allotment or sale, up to an aggregate nominal amount of £22,462
(representing approximately 10% of the issued share capital excluding treasury
shares as at the date of the notice of AGM or, if changed, the number
representing 10% of the issued share capital of the Company at the date at
which this resolution is passed) at a price per share not less than the net
asset value per share, such power to expire at the conclusion of the Annual
General Meeting of the Company to be held in 2025, unless previously revoked,
varied or renewed by the Company in General Meeting, save that the Company
may, at any time prior to the expiry of such power, make an offer to enter
into an agreement which would or might require equity securities or relevant
shares to be allotted or sold after the expiry of such power and the Directors
may allot equity securities or sell relevant shares in pursuance of such an
offer or agreement as if such power had not expired.
12 THAT the Company is hereby generally and unconditionally authorised
in accordance with Section 701 of the Companies Act 2006 (the “Act”) to
make purchases (within the meaning of Section 693(4) of the Act) of Ordinary
shares of 1p each in the capital of the Company (‘Ordinary shares’) for
cancellation or for placing into Treasury provided that:
(a) the maximum number of Ordinary shares authorised to be
acquired shall be 3,367,173 (or, if different, 14.99% of the Ordinary shares
in issue immediately following the passing of this Resolution);
(b) the minimum price (exclusive of expenses) which may be paid
for each Ordinary share is 1p;
(c) the maximum price (exclusive of expenses) which may be paid
for each Ordinary share, shall not be more than the higher of: (i) an amount
equal to 105% of the average of the middle market quotations of Ordinary
shares taken from the Daily Official List of the London Stock Exchange for the
five business days immediately preceding the day on which the contract of
purchase is made; and (ii) the higher of the price of the last independent
trade in the Ordinary shares and the highest then current bid for the Ordinary
shares on the London Stock Exchange’s market for larger established
companies;
(d) this authority will (unless renewed) expire at the conclusion
of the next Annual General Meeting of the Company held after the date on which
this Resolution is passed;
(e) the Company may make a contract of purchase for Ordinary
shares under this authority before this authority expires which will or may be
executed wholly or partly after its expiration; and
(f) any Ordinary shares bought back under the authority hereby
granted may, at the discretion of the Directors, be cancelled or held in
Treasury and if held in Treasury may be resold from Treasury or cancelled at
the discretion of the Directors.
13 THAT a general meeting other than an annual general meeting may be
called on not less than 14 clear days’ notice.
14 THAT the Company be and is hereby authorised in accordance with
section 701 of the Act (without prejudice to any other authority granted to
the Company under that section from time to time) to make market purchases
(within the meaning of section 693(4) of the Act) of ordinary shares of £0.01
each in the capital of the Company in respect of which a valid election has
been made in accordance with the terms and subject to the conditions set out
in the 2024 Realisation Opportunity Document (as defined in the Annual Report)
and the Annual Report dated 24 July 2024 (of which the notice convening this
Meeting forms a part) (the “Annual Report”) to participate in the 2024
Realisation Opportunity (as defined in the Annual Report) (“Elected
Shares”) provided that:
(a) the maximum aggregate number of Elected Shares authorised to
be purchased is 30,000,000;
(b) the price which may be paid for an Elected Share is the
Realisation Price (as defined in the Annual Report) (this being both the
maximum price and the minimum price for the purposes of section 701(3)(b) of
the Act); and
(c) this authority hereby conferred shall expire on 31 December
2024 unless such authority is renewed prior to such time, save that the
Company may make a contract to purchase Elected Shares under this authority
before the expiry of such authority which will or may be executed wholly or
partly after the expiration of such authority, and may make a purchase of
Elected Shares in pursuance of such contract.
15 THAT the Company be and is hereby generally and unconditionally
authorised in accordance with section 701 of the Act (without prejudice to any
other authority to the Company under that section from time to time) to make
one or more market purchases (within the meaning of section 693(4) of the Act:
of realisation shares of £0.01 each in the capital of the Company
(“Realisation Shares”) provided that:
(a) the maximum aggregate number of Realisation Shares authorised
to be purchased is 30,000,000, or if less, the aggregate number of Realisation
Shares which may be in issue whilst this resolution remains in force;
(b) the minimum price (exclusive of expenses) which may be paid
for a Realisation Share is £0.01;
(c) the maximum price (exclusive of expenses) which may be paid
for a Realisation Share pursuant to a tender offer made to all holders of
Realisation Shares shall be an amount equal to 100 per cent. of the net asset
value per Realisation Share determined by the Company as at such date as the
Company shall specify for the purposes of such tender offer, and in any other
case, shall be the greater of:
(i) 105 per cent. of the average of the middle market quotations for
a Realisation Share as derived from the daily official list of the London
Stock Exchange for the 5 business days immediately preceding the day on which
that Realisation Share is purchased; and
(ii) the higher of the price of the last independent trade of a
Realisation Share and the highest then current independent bid for a
Realisation Share on the trading venue where the purchase is carries out; and
(d) this authority hereby conferred shall expire 5 years after the
date on which this resolution is passed unless such authority is renewed prior
to such time, save that the Company may make a contract to purchase
Realisation Shares under this authority before the expiry of such authority
which will or may be executed wholly or partly after the expiration of such
authority, and may make a purchase of Realisation Shares in pursuance of such
contract.
All shareholders should look on the Company’s website, www.migoplc.co.uk,
for any last changes to the AGM arrangements. In any case, all shareholders
are strongly advised to exercise their votes in advance of the meeting by
proxy, by following the voting instructions overleaf.
By order of the Board
Frostrow Capital LLP, Company Secretary
MIGO Opportunities Trust plc
Registered Office: 25 Southampton Buildings, London WC2A 1AL
24 July 2024
Notes
As a shareholder, you have the right to attend, speak and vote at the
forthcoming Annual General Meeting or at any adjournment(s) thereof. In order
to exercise all or any of these rights you should read the following
explanatory notes to the business of the Annual General Meeting.
Note 1: To be entitled to attend and vote at the meeting (and for the purpose
of the determination by the Company of the number of votes they may cast)
members must be entered on the Company’s register of members at the close of
business on 16 September 2024 (or in the event that the meeting is adjourned,
only those shareholders registered on the Register of Members of the Company
as at the close of business on the day which is 48 hours prior to the
adjourned meeting) and shall be entitled to attend in person or by proxy and
vote at the Annual General Meeting in respect of the number of shares
registered in their name at that time. Changes to entries on the Register of
Members after that time shall be disregarded in determining the rights of any
person to attend or vote at the meeting.
Note 2: A member entitled to attend and vote at this meeting may appoint one
or more persons as his/her proxy to attend, speak and vote on his/her behalf
at the meeting. A proxy need not be a member of the Company but must attend
the meeting for the voting rights conferred to be exercised.
If multiple proxies are appointed they must not be appointed in respect of the
same shares. To appoint more than one proxy, shareholders will need to
complete a separate proxy form in relation to each appointment. Each proxy
appointment must state clearly the number of shares in relation to which the
proxy is appointed. A failure to specify the number of shares to which each
proxy appointment relates or specifying an aggregate number of shares in
excess of those held by the member will result in the proxy appointment being
invalid. Please indicate if the proxy instruction is one of multiple
instructions being given.
A proxy form for use in connection with the Annual General Meeting is
enclosed. To be valid, any proxy form or other instrument appointing a proxy,
together with any power of attorney or other authority under which it is
signed or a certified copy thereof, must be received by post or (during normal
business hours only) by hand by the Registrar at Computershare Investor
Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY no later than
48 hours (excluding non-working days) before the time of the Annual General
Meeting or any adjournment of that meeting.
If you do not have a proxy form and believe that you should have one, or you
require additional proxy forms, please contact the Registrar on 0370 889 3231.
Lines are open between 8.30am and 5.30pm, Monday to Friday. The Registrar’s
overseas helpline number is +44 370 889 3231.
The appointment of a proxy will not prevent a member from attending the
meeting and voting in person if he/she so wishes. A member present in person
or by proxy shall have one vote on a show of hands and on a poll every member
present in person or by proxy shall have one vote for every Ordinary share of
which he/she is the holder. The termination of the authority of a person to
act as proxy must be notified to the Registrar in writing.
In the case of joint holders of a share, the vote of the senior who tenders a
vote, whether in person or by proxy, shall be accepted to the exclusion of the
vote or votes of the other joint holder or holders, and seniority shall be
determined by the order in which the names of the holders stand in the
register.
Any question relevant to the business of the Annual General Meeting may be
asked at the meeting by anyone permitted to speak at the meeting. You may
alternatively submit your question in advance by letter addressed to the
Company Secretary at the registered office.
Note 3: A vote withheld is not a vote in law, which means that the vote will
not be counted in the calculation of votes for or against the resolutions. If
no voting indication is given, a proxy may vote or abstain from voting at
his/her discretion. A proxy may vote (or abstain from voting) as he or she
thinks fit in relation to any other matter which is put before the meeting.
Note 4: A person to whom this notice is sent who is a person nominated under
Section 146 of the Companies Act 2006 to enjoy information rights (a
“Nominated Person”) may, under an agreement between him/her and the
shareholder by whom he/she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual General Meeting. If a
Nominated Person has no such proxy appointment right or does not wish to
exercise it, he/she may, under any such agreement, have a right to give
instructions to the shareholder as to the exercise of voting rights.
Note 5: The statements of the rights of members in relation to the
appointment of proxies in Notes 1 and 2 above do not apply to a Nominated
Person. The rights described in those Notes can only be exercised by
registered members of the Company.
Note 6: As at 24 July 2024 (being the date of publication of this notice) the
Company’s issued share capital and total voting rights amounted to
22,462,797 Ordinary shares carrying one vote each.
Note 7: A person authorised by a corporation is entitled to exercise (on
behalf of the corporation) the same powers as the corporation could exercise
if it were an individual member of the Company. On a vote on a resolution on a
show of hands, each authorised person has the same voting rights as the
corporation would be entitled to. On a vote on a resolution on a poll, if more
than one authorised person purports to exercise a power in respect of the same
shares:
a) if they purport to exercise the power in the same way as
each other, the power is treated as exercised in that way;
b) if they do not purport to exercise the power in the same
way as each other, the power is treated as not exercised.
Note 8: Shareholders should note that it is possible that, pursuant to
requests made by shareholders of the Company under Section 527 of the
Companies Act 2006, the Company may be required to publish on a website a
statement setting out any matter relating to: (i) the audit of the Company’s
financial statements (including the Auditors’ report and the conduct of the
audit) that are to be laid before the Annual General Meeting; or (ii) any
circumstances connected with an auditor of the Company ceasing to hold office
since the previous meeting at which annual financial statements and reports
were laid in accordance with Section 437 of the Companies Act 2006. The
Company may not require the shareholders requesting any such website
publication to pay its expenses in complying with Sections 527 or 528 of the
Companies Act 2006. Where the Company is required to place a statement on a
website under Section 527 of the Companies Act 2006, it must forward the
statement to the Company’s auditors not later than the time when it makes
the statement available on the website. The business which may be dealt with
at the Annual General Meeting includes any statement that the Company has been
required under Section 527 of the Companies Act 2006 to publish on a website.
Note 9: In accordance with Section 319A of the Companies Act 2006, the
Company must cause any question relating to the business being dealt with at
the meeting put by a member attending the meeting to be answered. No such
answer need be given if:
a) to do so would:
(i) interfere unduly with the preparation for the meeting, or
(ii) involve the disclosure of confidential information;
b) the answer has already been given on a website in the form
of an answer to a question; or
c) it is undesirable in the interests of the Company or the
good order of the meeting that the question be answered.
Note 10: CREST members who wish to appoint a proxy or proxies by utilising
the CREST electronic proxy appointment service may do so for this meeting by
following the procedures described in the CREST Manual. CREST personal members
or other CREST sponsored members, and those CREST members who have appointed a
voting service provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate action on their
behalf.
In order for a proxy appointment or instruction made by means of CREST to be
valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with Euroclear’s specifications and
must contain the information required for such instructions, as described in
the CREST Manual. The message, in order to be valid, must be transmitted so as
to be received by the Company’s Registrar (ID 3RA50) by the latest time for
receipt of proxy appointments specified in Note 2 above. For this purpose, the
time of receipt will be taken to be the time (as determined by the timestamp
applied to the message by the CREST Applications Host) from which the
Registrar is able to retrieve the message by enquiry to CREST in the manner
prescribed by CREST. After this time, any change of instructions to proxies
appointed through CREST should be communicated to the appointee through other
means.
CREST members and, where applicable, their CREST sponsors or voting service
providers should note that Euroclear does not make available special
procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member or sponsored member or has
appointed a voting service provider(s), to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are referred, in particular,
to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
Note 11: The Annual Report incorporating this Notice of Annual General
Meeting and, if applicable, any members’ statements, members’ resolutions
or members’ matters of business received by the Company after the date of
this Notice, will be available on the Company’s website: www.migoplc.co.uk
Note 12: None of the Directors has a contract of service with the Company. A
copy of the letters of appointment of the Directors will be available for
inspection at the registered office of the Company during usual business hours
on any weekday (except weekends and public holidays) until the date of the
meeting and at the place of the meeting for a period of fifteen minutes prior
to and during the meeting.
Explanatory Notes to the Resolutions
Resolutions 1 to 10 will be proposed as ordinary resolutions and Resolutions
11 to 15 will be proposed as special resolutions.
Resolution 1 – To receive the Annual Report and Financial Statements
The Annual Report and Financial Statements for the year ended 30 April 2024
will be presented to the AGM and shareholders will be given an opportunity at
the meeting to ask questions. The Annual Report and Financial Statements will
be mailed to shareholders and can also be found on the Company’s website at
www.migoplc.co.uk.
Resolutions 2 – To receive and approve the Directors’ Remuneration Report
Resolution 2 relates to the Directors’ Remuneration Report of the Annual
Report.
Resolution 3 – To approve a final dividend
The rationale for the payment of a final dividend is set out in the
Chairman’s Statement and in the Business Review.
Resolutions 4 to 7 – Re-election and election of Directors
Resolutions 4 to 7 deal with the re-election or election of each Director.
Biographies of each of the Directors can be found in the Annual Report.
The Board has confirmed, following a performance review, that the Directors
standing for re-election or election continue to perform effectively.
Resolutions 8 and 9 – Re-appointment of auditors
Resolution 8 relates to the re-appointment of PricewaterhouseCoopers LLP as
the Company’s independent auditors to hold office until the next Annual
General Meeting of the Company and Resolution 9 authorises the Audit Committee
to set their remuneration. Following the implementation of the Competition and
Markets Authority order on Statutory Audit Services only the Audit Committee
may negotiate and agree the terms of the auditors’ service agreement.
Resolution 10 – Authority to allot ordinary shares
Resolution 10, an ordinary resolution as set out in the Notice of AGM, if
passed, will renew the Directors’ authority to allot shares in accordance
with statutory pre-emption rights. This resolution will authorise the Board to
allot ordinary shares generally and unconditionally in accordance with section
551 of Companies Act 2006 up to an aggregate nominal value of £74,875,
representing approximately one third of the Company’s issued share capital
as at the date of the Notice of AGM or, if changed, the number representing
one third of the issued share capital of the Company at the date at which this
resolution is passed.
The Company does not currently hold any shares in treasury.
The Board believes that the passing of Resolution 10 is in the shareholders’
interests as the authority is intended to be used for funding investment
opportunities sourced by the Investment Manager, thereby mitigating any
potential dilution of investment returns for existing shareholders, and the
Directors will only issue new ordinary shares at a price above the prevailing
NAV per Ordinary share. The authority, if given, will lapse at the conclusion
of the 2025 AGM of the Company.
The Directors do not currently intend to allot shares other than to take
advantage of opportunities in the market as they arise and only if they
believe it would be advantageous to the Company’s shareholders to do so.
Resolution 11 – Disapplication of pre-emption rights
Resolution 11, a special resolution, is being proposed to authorise the
Directors to disapply the statutory pre-emption rights of existing
shareholders in relation to the issue of shares under Resolution 10, for cash
or the sale of shares out of treasury up to an aggregate nominal amount of
£22,462, being approximately 10% of the Company’s issued share capital as
at the date of the Notice of AGM or, if changed, 10% of the issued share
capital immediately upon the passing of this resolution.
In respect of Resolution 11, shares would only be issued at a price above the
prevailing NAV per share. The Directors will only issue shares on a
non-pre-emptive basis if they believe it would be in the best interests of the
Company’s shareholders.
Resolution 12 – Purchase of own shares
Resolution 12, a special resolution, will renew the Company’s authority to
make market purchases of up to 3,367,173 ordinary shares (being 14.99% of the
issued share capital as at the date of the Notice of AGM), either for
cancellation or placing into treasury at the determination of the Directors.
Purchases of ordinary shares will be made within guidelines established from
time to time by the Board. Any purchase of ordinary shares would be made only
out of the available cash resources of the Company. The maximum price which
may be paid for an Ordinary share must not be more than the higher of (i) 5%
above the average of the mid-market value of the ordinary shares for the five
business days before the purchase is made, or (ii) the higher of the price of
the last independent trade and the highest current independent bid for the
Ordinary shares on the trading venue where the purchase is carried out. The
minimum price which may be paid is £0.01 per Ordinary share.
The Directors would only use this authority in order to address any
significant imbalance between the supply and demand for the ordinary shares
and to manage the discount to NAV at which the ordinary shares trade. Ordinary
shares will be repurchased only at prices below the NAV per Ordinary share,
which should have the effect of increasing the NAV per Ordinary share for
remaining shareholders.
This authority, if approved by shareholders, will expire at the AGM to be held
in 2025, when a resolution for its renewal will be proposed.
Resolution 13 – Notice period for general meetings
In terms of the Companies Act 2006, the notice period for general meetings
(other than an AGM) is 21 clear days’ notice unless the Company:
(i) has gained shareholder approval for the holding of general meetings
on 14 clear days’ notice by passing a special resolution at the most recent
AGM; and
(ii) offers the facility for all shareholders to vote by electronic means.
The Company would like to preserve its ability to call general meetings (other
than an annual general meeting) on less than 21 clear days’ notice. The
shorter notice period proposed by resolution 13, a special resolution, would
not be used as a matter of routine, but only where the flexibility is merited
by the business of the meeting and is thought to be in the interests of
shareholders as a whole. The approval will be effective until the date of the
AGM to be held in 2025, when it is intended that a similar resolution will be
proposed.
Resolution 14 – Buyback of Elected Shares
In accordance with the Articles, Shareholders are being offered the
opportunity to elect to realise all or part of their holdings of Ordinary
shares pursuant to the 2024 Realisation Opportunity. The Company proposes to
satisfy elections through a combination of mechanisms, starting initially with
one or more placings in the market. To the extent that any Ordinary Shares in
respect of which an election has been made (“Elected Shares”) cannot be
placed in the market the Company will seek to engage a broker (the
“Broker”) who will, acting as principal, purchase unplaced Elected Shares,
to be bought back by the Company, at the price representing 98 per cent. of
the NAV per Ordinary share as at the Realisation NAV Calculation Date as at
close of business on 2 September 2024 (the “Realisation Price”), subject
to the Company having sufficient authority to do so.
The Company is therefore proposing Resolution 14 at the AGM to seek specific
authority to effect market buyback of unplaced Elected Shares from the Broker
at the Realisation Price.
The maximum number of unplaced Elected Shares authorised to be bought back
will not be more than 30,000,000 Ordinary shares, representing 133.55 per
cent. of the issued Ordinary share capital of the Company as at 23 July 2024
(being the latest practicable date prior to the publication of this Annual
Report), excluding any Ordinary shares held in treasury (of which there are
none as at the latest practicable date prior to the publication of this Annual
Report).
The authority will expire on 31 December 2024 unless such authority is renewed
prior to such time, although the Company may make a contract to purchase
Elected Shares under this authority before the expiry of such authority which
will or may be executed wholly or partly after the expiration of such
authority and may make a purchase of Elected Shares in pursuance of any such
contract.
Any unplaced Elected Shares repurchased pursuant to this authority will be
cancelled.
Resolution 14 is proposed in order to give the Board the power to buy back
Elected Shares which cannot be placed in the market.
Resolution 15 – Buyback of Realisation Shares
Any Elected Shares not placed in the market or purchased and bought back by
the Company, will be re-designated as realisation shares in accordance with
the Articles (“Realisation Shares”).
To provide for the possibility that the Board may choose to return cash to
holders of Realisation Shares by way of a buyback mechanism in due course, the
Company is proposing Resolution 15 at the AGM to seek a general authority to
effect market buybacks of Realisation Shares in the future. If this authority
is utilised in the future, it is intended that realised proceeds will be
returned to holders of Realisation Shares and this would decrease the size of
the Realisation Share class.
The maximum number of Realisation Shares authorised to be bought back will not
be more than 30,000,000 Realisation Shares, or if less, the aggregate number
of Realisation Shares which may in issue while this resolution remains in
force.
The minimum price (exclusive of expenses) which may be paid for a Realisation
Share is £0.01.
The maximum price (exclusive of expenses) which may be paid for a Realisation
Share pursuant to a tender offer made to all holders of Realisation Shares
shall be an amount equal to 100 per cent. of the net asset value per
Realisation Share determined by the Company as at such date as the Company may
specify for the purposes of such tender offer, and in any other case, shall be
the greater of: (i) 105 per cent. of the average of the middle market
quotations for a Realisation Share as derived from the daily official list of
the London Stock Exchange for the 5 Business Days immediately preceding the
day on which that Realisation Share is purchased; and (ii) the higher of the
price of the last independent trade of a Realisation Share and the highest
then current independent bid for a Realisation Share on the trading venue
where the purchase is carried out.
This authority will expire 5 years after the date on which Resolution 15 is
passed unless such authority is renewed prior to such time, although the
Company may make a contract to purchase Realisation Shares under this
authority before the expiry of such authority, and may make a purchase of
Realisation Shares in pursuance of any such contract.
Realisation Shares bought back from time to time will be cancelled.
The Board intends to seek a renewal of this general authority at future annual
general meetings at regular three-year intervals.
The 2024 Realisation Opportunity is provided for under the Articles and is not
conditional upon Resolutions 14 and 15 being passed, although the delivery of
the 2024 Realisation Opportunity may be constrained if Resolutions 14 and 15
are not passed.
Directors’ Recommendation
The Directors consider each resolution being proposed at the AGM to be in the
best interests of the Company and shareholders as a whole and they unanimously
recommend that all shareholders vote in favour of them, as they intend to do
in respect of their own beneficial shareholdings.
The Annual Report will be posted to shareholders on 30 July 2024
Further copies may be obtained from the Company Secretary, Frostrow Capital
LLP, 25 Southampton Buildings, London WC2A 1AL.
A copy of the Annual Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Annual Report will also be available on the Company’s website at
www.migoplc.co.uk where up to date information on the Company can also be
found.
Ends
Neither the contents of the Company’s website nor the contents of any
website accessible from hyperlinks on the Company’s website (or any other
website) is incorporated into, or forms part of, this announcement.
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